Local market characteristics such as direct (insurer dominated), prolonged soft and reinsurance capacity dependent led Mongolian insurance market to enter into market collaboration infrastructure recently. A new digital platform has been launched and is designed to sharing of risks (co-insurance), exchanging risks and allows opportunity for local insurers to cede risks to international markets.

Mongolian insurance market is relatively young market and developing since 1990. With 15 non-life insurers, 1 reinsurer and 1 life insurer, local brokers entered into the market a decade later and currently accounts 26% of total GWP.

Like any other developing country, Mongolian insurance market has access to international reinsurance market however global hardening of reinsurance market is affecting local market’s ability to transfer risks. On the other hand, due to historical low frequency of bigger losses, local market has been softening for a decade.

Another characteristic is that co-insurance is not a popular practice in the market and it consequently resulted insufficient use of market’s own capacity and resulted higher demand for risk cession to international markets.

This variation of local and international market’s cycle and recent severe and widespread impact of the Covid-19 pandemic led market participants to solve issues creatively and the platform has been commissioned as a result.

The platform is designed to sharing of risks (co-insurance), exchanging risks and further, ceding risks to international markets. In order to solve common issues, vast majority of insurers have joined to the platform which empowers insurers from co-insuring middle-sized risks to forming consortiums to tenders with the help of technology and professional intermediary. This helps insurers’ ability to manage risks and is eventually beneficial to local market’s resilient growth. Further the platform will support portfolio management and market-wide collaboration amongst participants.

Connecting insurers and laying tech based financial infrastructure is crucial than ever before at this phase of recovering economy and hardening of international markets. Number of strict lockdowns signaled businesses to reform their ways of doing business and major way out was automating business processes as much as possible.

The timing is also interesting as there are increasing number of tech solutions in local financial services sector in overall such as development of cryptocurrency, lending apps and financial services using AI and these all are preparing mindset of the population to welcome such solutions and is forming foundation for further services to thrive. With young and enthusiastic engineers, financial services sector nowadays is getting innovative and overseas and local investments are being made to the sector.

In overall, Mongolian financial services sector is digitalizing and recovering after Covid-19. Harder times bring brighter solutions. With this B2B digital solution, local insurers are now able to collaborate at higher level and use their capacity more efficiently and cede higher valued risks to international markets through the platform.