By Chino S. Leyco
The Philippines has called for stronger cooperation on disaster risk financing and insurance (DRFI) strategies among the member-states of the Association of Southeast Asian Nations (ASEAN) in light of the region’s vulnerability to natural calamities that often lead to loss of lives and economic disruptions that threaten growth.
Finance Secretary Carlos G. Dominguez III (Bloomberg photo)
On behalf of the Philippine government, Finance Secretary Carlos G. Dominguez III also expressed support for ASEAN’s DRFI’s Initiative of liberalizing catastrophic risk insurance to allow for greater access of financial services that protect against disaster risks in the region.
Dominguez said that liberalizing catastrophic risk insurance will also encourage the development within the ASEAN of disaster risk information and modeling systems that can be used “to assess the economic and fiscal impacts of natural disasters, including the sharing of disaster risk data and information at the national level.”
In voicing the Philippines’ position on DRFI during the recently concluded 23rd ASEAN Finance Ministers’ Meeting, Dominguez said some possible ongoing activities that can be enhanced through inter-sectoral cooperation should include “regional capacity building on information and experience sharing, awareness and education on DRFI as well as sharing of experiences among member-states on fiscal risk management.”
The Philippines is among the countries in the region most vulnerable to natural disasters. Super typhoon Yolanda (Haiyan) in 2013 alone claimed over 6,000 lives and cost the Philippine economy an estimated P571 billion ($12.87 billion) in damages, hampering economic growth by about 0.9 percentage points that year, and another 0.3 percentage points in 2014.
In December last year, the Philippines successfully placed on the international market its parametric insurance policy with a maximum cover of P20.49 billion that can provide quick liquidity to national and local governments.
This program includes coverage for national and local government assets against natural calamities including public elementary and high schools in 25 disaster-prone provinces in the country’s eastern seaboard.
The Parametric Insurance Policy, which will enable these 25 catastrophe-vulnerable provinces and the national government to act faster and respond better against natural calamities, became effective starting midnight of Dec. 19, 2018.
With assistance from the World Bank, the insurance program covers provinces along the Eastern Seaboard namely, Albay, Aurora, Batanes, Cagayan, Camarines Norte, Camarines Sur, Catanduanes, Cebu, Davao del Sur, Davao Oriental, Dinagat Islands, Eastern Samar, Ilocos Norte, Ilocos Sur, Isabela, Laguna, Leyte, Northern Samar, Pampanga, Quezon, Rizal, Sorsogon, Surigao del Norte, Surigao del Sur and Zambales.
Under this program, the Government Service Insurance System (GSIS) provides catastrophe risk-insurance coverage particularly for the Department of Education (DepEd) along with the 25 selected provinces.
The World Bank, through its International Bank for Reconstruction and Development (IBRD), acts as the intermediary to transfer or cede GSIS risks to the global reinsurance market, thus minimizing risks for the government.
In turn, the Bureau of the Treasury is the designated policyholder representing the 25 provinces as well as the national government.