The insurance industry in Mongolia is currently small and still in its development stage. The share of the insurance industry is 0.7% of the whole financial sector. Despite the growth of the insurance sector and recent global awareness on financial inclusion, the insurance market in Mongolia can hardly be considered inclusive at this time. Small companies generate around 20% of Mongolia’s GDP and provide employment of 70% of the national workforce. There are challenges in insurance sector such as the lack of effective distribution channels to reach SMEs.

As of 2008, 154,644 families had been living in Ulaanbaatar ger area. This number had reached to 197,094 by 2013. In terms of socioeconomic status, ger area families tend to be larger, less educated, younger and poorer than apartment area households. Life pattern and living environment of ger area bring particular risks. For that reason, risk protection is needed to ger area residents because of their financial vulnerability. It is important to make ger area residents understand the benefits of insurance to protect them.

Low-income people are highly vulnerable to risks, especially health problems, the destruction of their houses, assets, harvest or livestock due to natural catastrophes or to losing the breadwinner of the family in an accident. However, the option of purchasing an insurance policy to become capable of dealing with financial shocks remains ineffective due to the lack of access to affordable and responsive insurance.

In Mongolia a large number of people, most of them from the low-income sector, lives still in traditional gers, a portable, round tent covered with skins or felt traditionally used as a dwelling. Gers, houses and surrounding fences in the ger districts are highly vulnerable to flood and fire risks. However, these low-income families do not have the financial means to cope with the severe flooding or fire events that threaten their livelihood. Without financial education, they struggle to have regular access to appropriate insurance products.