Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) EUROPE AND CENTRAL ASIA | Kazakhstan | Finance, Competitiveness and Innovation Global Practice | Global Environment Project | Investment Project Financing | FY 2016 | Seq No: 6 | ARCHIVED on 11-Oct-2019 | ISR38789 | Implementing Agencies: Europa Re, Europa Re Key Dates Key Project Dates Bank Approval Date: 08-Apr-2016 Effectiveness Date: 25-May-2016 Planned Mid Term Review Date: 11-Nov-2019 Actual Mid-Term Review Date: Original Closing Date: 31-Dec-2019 Revised Closing Date: 31-Dec-2019 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is to assist Kazakhstan with developing a modern catastrophe insurance market infrastructure that will support the launch of affordable, innovative catastrophe insurance products covering the risks of weather extremes. The proposed project activities support GEF’s focus on climate change and more specifically, GEF’s objectives on climate change adaptation. By increasing access to sound catastrophe and weather risk insurance products for millions of people in Kazakhstan, SEECA CRIF is also in line with the GEF strategy on adaptation. By supporting proper catastrophe risk management and risk transfer, SEECA CRIF reduces economic losses at both local and national levels from extreme weather related events, thereby reducing economic vulnerability and contributing toward increased climate resilience at the national level. SEECA CRIF activities are also cross-cutting and collaborative, ensuring the engagement of major stakeholders in Kazakhstan, including the Ministry of Economic Development and Planning, the National Bank, and the Insurance Association. Moreover, because much of the technical work will be focused on establishing complex catastrophe insurance infrastructure and systems, stakeholders will gain the requisite skills and knowledge to better understand catastrophe risk and effectively adapt to such risks and climate change. Furthermore, public awareness of climate change and the benefits of catastrophe and weather risk insurance will be raised through information campaigns and the public discussion of the new Law on Compulsory Catastrophe Insurance, resulting in increased demand for catastrophe and weather risk insurance products. The project also aims to provide national and local governments as well as private individuals with the up-to-date actionable information on the risk of natural disasters faced the communities and certain segments of national economy. The information will be delivered to the decision makers in the form of workshops, risk maps and through interactive education tools available on-line. Although the project has been designed specifically for Kazakhstan, it can be easily replicated in other countries of the region that are adversely affected by climate change through the extension of insurance market infrastructure and insurance services to be developed for Kazakhstan to other markets of the region. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Funding of technical assistance to expand SEE CRIF program to Kazakhstan.:(Cost $5.00 M) 10/11/2019 Page 1 of 8 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO ►Satisfactory ►Satisfactory Overall Implementation Progress (IP) ►Satisfactory ►Satisfactory Overall Risk Rating ►Moderate ►Moderate Implementation Status and Key Decisions Over the last six months period the project has been on track under successful implementation by Europa RE, the project implementation agency and a specialty catastrophe re-insurer. Continued steady progress and certain new positive outcomes have been achieved. The disbursement has reached US$4.2 million, or slightly above 84 percent of the total grant. The current status of project implementation by Europa Re is continued to be rated as Satisfactory. The Bank carried out technical, procurement and financial supervision of the project and the following progress has been observed: Agriculture insurance pilot project: Since Spring 2018, a highly innovative credit risk default insurance product has been launched to insure agricultural commodity producers’ loans against risks of default under loan agreements in case of lower average regional yields. The product enables agricultural producers to obtain a larger loan amount without providing additional collateral. The pilot project has been implemented for borrowers of the Agrarian Credit Corporation JSC (ACC) – the largest agricultural lender in the country. Over the reporting period, Europa Re has provided additional round of extensive capacity building assistance to the insurance agents and staff of the Oil Insurance Company (OIC) – the local pilot insurance partner (about 50 people in total across pilot regions). In addition, Europa Re continued to work with the local insurance partner on changing its business processes to enable it to successfully sell the product. Since the sales season launch in March 2019, four General Insurance contracts were concluded with Credit Unions and 12 single Contracts with an amount totaling to apprx. US$18,500 covering 21,000 ha of crops. However, the actual uptake is however lower than was projected. The main reasons include: (i) the internal reorganization of the ACC; (ii) closure of KenDala Program under which the insurance product was launched; (iii) variances in terms and conditions of the current AgroBusiness Program used for the insurance product; and (iv) lack of financing, including high collateral requirements to rural communities. EReagro application: After the extensive system testing, both internally and by the insurance partner sales agents, the fully automated web-based IT on-line platform was successful launched and is being used to sell the product. It had a round of follow-on improvements to technically advance the platform and make it more user-friendly. CATMonitor. The platform is currently in its full operation since April 2018 aimed to provide education and raise disaster risk awareness (earthquake risk) among the general public, and can be accessed to public at https://catmonitor.com/catmonitor/?lang=ru. Project implementation progress towards achieving PDO level and intermediate indicators by the closing date has already been at its full pace since 2018, and the project has already met all its key objectives as measured by the outcome indicators to date. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance ►Moderate ►Moderate ►Moderate Macroeconomic ►Moderate ►Moderate ►Moderate Sector Strategies and Policies ►Moderate ►Moderate ►Moderate Technical Design of Project or Program ►Moderate ►Moderate ►Moderate Institutional Capacity for Implementation and Sustainability ►Low ►Low ►Low Fiduciary ►Low ►Low ►Low Environment and Social ►Low ►Low ►Low 10/11/2019 Page 2 of 8 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Stakeholders ►Moderate ►Moderate ►Moderate Other ►Moderate ►Moderate ►Moderate Overall ►Moderate ►Moderate ►Moderate Results PDO Indicators by Objectives / Outcomes Assist Kazakhstan with developing a modern catastrophe insurance market infrastructure IN00750759 ►Insurance market infrastructure made available for use to local insurance companies in support of catastrophe risk insurance products. (Number) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 1.00 Date 21-Apr-2016 20-Mar-2019 01-Oct-2019 31-Dec-2019 Achieved. Since May 2018, one local SECA CRIF project partner insurance company launched sales of weather risk credit default product developed under the project. The sales were carried out using the web-based underwriting platform, Comments: weather risk data and pricing algorithms developed under the SECA CRIF project. Second round of sales has been successfully launched in Spring 2019, which also benefited from enhanced web-based underwriting platform. Consumers are more aware of disaster risks and the mitigating role of insurance IN00750758 ►CatMonitor - a web-based disaster risk information tool for homeowners is launched (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 03-Apr-2018 01-Oct-2019 31-Dec-2019 The indicator measures the success of project in providing local homeowners with actionable and scientifically proven information about the vulnerability of their dwellings to EQ risk. Comments: Achieved. CatMonitor web-based platform was in full operation since April 2018, and is being continuously monitored to ensure its availability to homeowners in Kazakhstan. TA is provided to government/NBK in developing enabling insurance regulatory framework for cat risk IN00750757 ►Completion of TA (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-Dec-2015 24-Jul-2018 24-Jul-2018 31-Dec-2018 The indicator measures the success of the project in assisting the local insurance market regulator - the National Bank of Comments: Kazakhstan - with examples of best international regulatory practices for catastrophe insurance risk, assessment of the current local regulatory and market practices, and recommendations on how the regulations can be improved. 10/11/2019 Page 3 of 8 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Achieved. The TA was completed with final outputs delivered to NBK in July 2018. Overall Comments PDO Overall, the project has already met all its key objectives as measured by the outcome indicators. Intermediate Results Indicators by Components Funding of technical assistance to expand SEE CRIF program to Kazakhstan. IN00750760 ►Catastrophe risk insurance products are offered online.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 20-Mar-2019 01-Oct-2019 31-Dec-2019 The indicator measures whether products developed by ERE can be purchased by interested consumers online. Comments: Achieved. Consumers can buy insurance products developed by ERe online since March 2019. IN00750791 ►Online claims management system is launched.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 20-Mar-2019 20-Mar-2019 30-Sep-2019 Achieved. Consumers can submit claims online starting March 2019. Comments: IN00750792 ►Insurance premium of basic catastrophe insurance products are affordable for a good risk consumer. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 7.00 2.00 2.00 2.00 Date 21-Apr-2016 01-Mar-2019 30-Sep-2019 30-Sep-2019 The premium rates for the credit default insurance products for a low risk consumer vary between 1.5-3 percent of sum insured. Comments: Achieved. The premium rates for the insurance products for a low risk consumer was reduced from 7 to 2 percent of sum insured since late 2018. IN00750793 ►Online automated sales, underwriting and pricing system is launched.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes 10/11/2019 Page 4 of 8 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Date 21-Apr-2016 20-Mar-2019 01-Oct-2019 30-Sep-2019 Achieved. The online automated sales, underwriting and pricing system has been already since late 2018, and was Comments: successfully launched in Spring 2019. IN00750794 ►Cat risk insurance products developed under the project are available through local insurance industry in Kazakhstan.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 20-Mar-2019 01-Oct-2019 31-Dec-2019 Achieved. Insurance products were piloted and are available through the local pilot insurance partner - Oil Insurance Comments: Company (OIC) since 2018 IN00750795 ►Number and type of new cat risk insurance products developed. (Number) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.00 2.00 2.00 Date 21-Apr-2016 20-Mar-2019 01-Oct-2019 30-Sep-2019 Achieved. Two cat risk insurance products developed Comments: IN00750796 ►Insurance agents in the market offer catastrophe risk insurance developed under SECA CRIF project. (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 20-Mar-2019 01-Oct-2019 31-Dec-2019 Achieved. Under the pilot, the products have been sold to consumers directly by the local partner insurance company without using the services of intermediaries. In 2019, to expand the sales of products, the insurance agents were trained and Comments: are widely used. IN00750797 ►Number of women insured against natural disasters as % of total insured.(Percentage) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 50.00 50.00 Date 21-Apr-2016 07-Feb-2018 02-Oct-2019 30-Sep-2019 Achieved. Women insured against natural disasters under the project represent half of total insured. Comments: IN00750798 ►Appropriate legislation and risk-based regulatory framework for catastrophe risk products is developed.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 20-Mar-2019 01-Oct-2019 31-Dec-2019 10/11/2019 Page 5 of 8 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Achieved. Under the project, TA to provide consultancy support to the National Bank of Kazakhstan (NBK) in developing and implementing international best practices in regulation of insurance and reinsurance activities and risk-based supervision of catastrophe and agricultural all risk insurance policies to increase the national insurance market potential and ensure the efficiency and transparency of specialized insurance and reinsurance activities was completed. The final Survey Comments: Report on Earthquake Insurance Risk Review was delivered in Summer 2018. The development of risk-based regulatory and supervision instruments is undertaken considering the risk-oriented supervisory instruments developed and used by the NBK. IN00750799 ►Number of insurance companies selling catastrophe insurance products through insurance market infrastructure developed under the project.(Number) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 1.00 Date 21-Apr-2016 20-Mar-2019 02-Oct-2019 31-Dec-2019 Achieved. The local insurance partner, OIC, is selling cat risk products in the insurance market developed under the project since 2018. Extensive capacity building activities are being provided on a regular basis during the project implementation Comments: period. IN00750800 ►CatMonitor custom-tailored for Kazakhstan is made available online and regularly maintained.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 20-Mar-2019 30-Sep-2019 30-Sep-2019 Achieved. The CatMonitor has been successfully launched and is now available for use in Russian and English from Comments: Europa Re website. IN00750801 ►Actuarial and probabilistic risk models in support of product pricing have been developed.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 07-Feb-2018 30-Sep-2019 30-Sep-2019 Achieved. Actuarial and probabilistic risk model in support of product pricing have been developed in February 2018. Comments: IN00750802 ►Demand boosting measures have been carried out as a result of technical assistance provided to government/insurance regulator under the project. (Number) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 20-Mar-2019 30-Sep-2019 31-Dec-2019 The indicator measures any actions carried out directly under the SECA CRIF project or by project partners (such as government or insurance companies) to boost the demand for insurance products developed under the project. Comments: Achieved. A set of measures have been introduced to boost the demand for cat risk insurance in Kazakhstan under the project. 10/11/2019 Page 6 of 8 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P152230 TF-A1934 Effective USD 5.00 5.00 0.00 4.21 0.79 84% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P152230 TF-A1934 Effective 20-Apr-2016 20-Apr-2016 25-May-2016 31-Dec-2019 31-Dec-2019 Cumulative Disbursements 10/11/2019 Page 7 of 8 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 10/11/2019 Page 8 of 8