Mitigating disasters
Published Oct 24, 2022 12:05 am
FROM THE MARGINS
Oct. 13 was the International Day for Disaster Risk Reduction. We need to take heed because the Philippines is the most disaster-prone country in the world, according to the World Risk Report 2022. Based on the general notion that the emergence of disaster depends not only on how natural hazards hit a society but also on the society’s vulnerability to their effects, the report underscores the relevance of social capacities in disaster preparedness.
Super typhoon Karding devastated our agricultural sector recently. Fortunately, there were few casualties because the government implemented safety measures, like information dissemination, activation of Disaster Risk Reduction Management (DRRM) Teams, school and business closures, and preemptive evacuation. It goes to show that damages from natural calamities can be mitigated with timely preparation.
Helping the most vulnerable
It is not just the government that needs to prepare for natural disasters. To the extent possible, we, citizens should also avail of safety nets to help us cope with calamities and other unforeseen events. Savings and insurance are some of the measures we can take to protect our families and help us bounce back in the wake of disaster.
“I learned my lesson after Typhoon Yolanda,” relates Delia Lagario from Sta. Rita, Samar. The country’s worst-ever natural disaster destroyed their home and livelihood in 2013. Luckily for her, she was a member of a microfinance institution (MFI) with financial literacy programs. She had savings and microinsurance, which helped her re-build their house and sari-sari store.
Insurance has a critical role to play in disaster resilience because it provides post-disaster funding and liquidity. Microinsurance, which targets low-income groups, is especially important in helping poor people cope with unexpected shocks.
Delia is a case in point. The proceeds from her microinsurance plan helped her recover from Typhoon Yolanda’s devastation. It happened again in 2017, when Urduja, another strong typhoon, hit their province. The roof and walls of her store collapsed, damaging all her goods. She photographed the destruction and immediately visited her MFI to file a claim. After two days, she received ₱5,000, which she used to buy materials and pay for her store’s repairs. She says, “I am grateful that I have Sagip Negosyo because it helps in rebuilding my business.”
Low-income individuals need insurance due to their higher vulnerability and a smaller cushion of resources to draw upon in times of need. Fortunately, in recent years, the sale of affordable microinsurance products continues to grow in the Philippines. Last September, Insurance Commissioner Dennis Funa said there was a 14.8 percent increase in premium or contribution production among microinsurance providers, from P2.31 billion in the 1st quarter of 2021 to ₱2.65 billion in 2022.
The growth, he said, is driven by greater public awareness and the easing of quarantine restrictions. He also observed that the lingering adverse economic effects of the pandemic may have contributed to the increase, meaning, those who are accessing microcredit are likely availing of bundled microinsurance products.
Indeed, many MFIs and mutual benefit associations (MBAs) in the Philippines are offering financial products bundled with microinsurance. They are even partnering with commercial insurance companies to expand their members’ protection. For instance, a joint venture between a microinsurance MBA and a commercial insurance company is offering “Sagip Plan,” a very affordable insurance package with personal accident and burial benefits, as well as calamity aid covering damages from fire, typhoon, flood and earthquake. It is offered to the members of the MBA’s MFI network, composed mostly of poor women in rural areas.
Commissioner Funa said that an estimated 44.81 million Filipinos were secured by microinsurance in the first quarter, with MBAs accounting for almost 60 percent of microinsurance contributions. This is a good development, a win-win, both for financial inclusion and poverty reduction. Giving poor people access to microfinance enables them put up income-generating microenterprises. Giving them access to microinsurance products — life insurance, loan insurance, retirement fund, disaster insurance, business interruption insurance, hospitalization insurance, agriculture insurance, property insurance, among others –increases their resiliency.
What more can the government do
That we have the highest disaster risk among 193 countries covered in the World Risk Report 2022 merits reflection. Let us shift from reactive to proactive action by improving our people’s social conditions. Aside from updating DRRM plans, upgrading our technological systems and increasing resources earmarked for disaster risk reduction, the government should also seriously consider:
1. Intensifying public education and community involvement in DRRM, e.g., tapping grassroots organizations to educate the public on disaster preparedness;
2. Retaining the tax exemption of NGOs, credit cooperatives, MFIs, and Microinsurance-MBAs so they can serve the most vulnerable segments of the population;
3. Supporting partnerships between community-based organizations and commercial insurance companies by easing regulatory requirements and providing fiscal incentives; and
4. Reducing and simplifying the tax on non-life insurance products to make them more affordable.
These measures will go a long way towards capacitating the most vulnerable among us to be better prepared. Given climate change, we need to do this now. As financial adviser and author Howard Ruff reminds us: “It wasn’t raining when Noah built the ark.”
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically-disadvantaged Filipinos and insure more than 27 million nationwide.)
Oct. 13 was the International Day for Disaster Risk Reduction. We need to take heed because the Philippines is the most disaster-prone country in the world, according to the World Risk Report 2022. Based on the general notion that the emergence of disaster depends not only on how natural hazards hit a society but also on the society’s vulnerability to their effects, the report underscores the relevance of social capacities in disaster preparedness.
Super typhoon Karding devastated our agricultural sector recently. Fortunately, there were few casualties because the government implemented safety measures, like information dissemination, activation of Disaster Risk Reduction Management (DRRM) Teams, school and business closures, and preemptive evacuation. It goes to show that damages from natural calamities can be mitigated with timely preparation.
Helping the most vulnerable
It is not just the government that needs to prepare for natural disasters. To the extent possible, we, citizens should also avail of safety nets to help us cope with calamities and other unforeseen events. Savings and insurance are some of the measures we can take to protect our families and help us bounce back in the wake of disaster.
“I learned my lesson after Typhoon Yolanda,” relates Delia Lagario from Sta. Rita, Samar. The country’s worst-ever natural disaster destroyed their home and livelihood in 2013. Luckily for her, she was a member of a microfinance institution (MFI) with financial literacy programs. She had savings and microinsurance, which helped her re-build their house and sari-sari store.
Insurance has a critical role to play in disaster resilience because it provides post-disaster funding and liquidity. Microinsurance, which targets low-income groups, is especially important in helping poor people cope with unexpected shocks.
Delia is a case in point. The proceeds from her microinsurance plan helped her recover from Typhoon Yolanda’s devastation. It happened again in 2017, when Urduja, another strong typhoon, hit their province. The roof and walls of her store collapsed, damaging all her goods. She photographed the destruction and immediately visited her MFI to file a claim. After two days, she received ₱5,000, which she used to buy materials and pay for her store’s repairs. She says, “I am grateful that I have Sagip Negosyo because it helps in rebuilding my business.”
Low-income individuals need insurance due to their higher vulnerability and a smaller cushion of resources to draw upon in times of need. Fortunately, in recent years, the sale of affordable microinsurance products continues to grow in the Philippines. Last September, Insurance Commissioner Dennis Funa said there was a 14.8 percent increase in premium or contribution production among microinsurance providers, from P2.31 billion in the 1st quarter of 2021 to ₱2.65 billion in 2022.
The growth, he said, is driven by greater public awareness and the easing of quarantine restrictions. He also observed that the lingering adverse economic effects of the pandemic may have contributed to the increase, meaning, those who are accessing microcredit are likely availing of bundled microinsurance products.
Indeed, many MFIs and mutual benefit associations (MBAs) in the Philippines are offering financial products bundled with microinsurance. They are even partnering with commercial insurance companies to expand their members’ protection. For instance, a joint venture between a microinsurance MBA and a commercial insurance company is offering “Sagip Plan,” a very affordable insurance package with personal accident and burial benefits, as well as calamity aid covering damages from fire, typhoon, flood and earthquake. It is offered to the members of the MBA’s MFI network, composed mostly of poor women in rural areas.
Commissioner Funa said that an estimated 44.81 million Filipinos were secured by microinsurance in the first quarter, with MBAs accounting for almost 60 percent of microinsurance contributions. This is a good development, a win-win, both for financial inclusion and poverty reduction. Giving poor people access to microfinance enables them put up income-generating microenterprises. Giving them access to microinsurance products — life insurance, loan insurance, retirement fund, disaster insurance, business interruption insurance, hospitalization insurance, agriculture insurance, property insurance, among others –increases their resiliency.
What more can the government do
That we have the highest disaster risk among 193 countries covered in the World Risk Report 2022 merits reflection. Let us shift from reactive to proactive action by improving our people’s social conditions. Aside from updating DRRM plans, upgrading our technological systems and increasing resources earmarked for disaster risk reduction, the government should also seriously consider:
1. Intensifying public education and community involvement in DRRM, e.g., tapping grassroots organizations to educate the public on disaster preparedness;
2. Retaining the tax exemption of NGOs, credit cooperatives, MFIs, and Microinsurance-MBAs so they can serve the most vulnerable segments of the population;
3. Supporting partnerships between community-based organizations and commercial insurance companies by easing regulatory requirements and providing fiscal incentives; and
4. Reducing and simplifying the tax on non-life insurance products to make them more affordable.
These measures will go a long way towards capacitating the most vulnerable among us to be better prepared. Given climate change, we need to do this now. As financial adviser and author Howard Ruff reminds us: “It wasn’t raining when Noah built the ark.”
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically-disadvantaged Filipinos and insure more than 27 million nationwide.)