A P1 billion insurance fund that will enable 25 disaster-prone provinces to act faster and better respond to the devastating impact of natural calamities is now available under the government’s Parametric Insurance Pilot project, according to the Department of Finance (DOF).
In a report to Finance Secretary Carlos Dominguez III, DOF Assistant Secretary and spokesperson Paola Alvarez said the Parametric Insurance Pilot will provide typhoon and earthquake insurance support in the 25 provinces covered by the project, including the typhoon-vulnerable provinces of Batanes and Albay and the quake-hit province of Leyte.
“Unlike the traditional indemnity insurance that takes a long time to assess and process, this Parametric Insurance Pilot will have quick-disbursing payouts whose amounts will depend on the estimated loss triggers determined through the Philippines’ Catastrophic Risk Model developed by the DOF in 2014,” Alvarez said at a recent DOF executive committee (Execom) meeting.
With assistance from the World Bank, the project covers 25 local government units (LGUs) that include the provinces of Aurora, Cagayan, Camarines Norte, Camarines Sur, Catanduanes, Cebu, Davao del Sur, Davao Oriental, Dinagat Islands, Eastern Samar, Ilocos Norte, Ilocos Sur, Isabela, Laguna, Northern Samar, Pampanga, Quezon, Rizal, Sorsogon, Surigao del Norte, Surigao del Sur and Zambales.
“This is one of the many efforts of the Duterte administration in making the country disaster resilient and sustainable,” Alvarez said.
The potential beneficiary-LGUs can avail themselves of the insurance cover in the event of a catastrophic earthquake or typhoon from the Government Service Insurance System with coverage fully ceded to the international reinsurance market, thus minimizing risks for the government.
“Since the Bureau of Treasury is the policyholder, the funds will be mobilized faster the first responders, namely, the national government and the LGUs,” Alvarez said.
The Pilot, consistent with the Philippines’ Disaster Risk Financing and Insurance Strategy, is effective for one year starting on July 28 2017. The project fulfills part of the expected outcomes of the National Disaster Risk Reduction and Management (NDRRM) Plan 2011-2028.
“Our disaster risk financing strategy provides a comprehensive framework for the implementation of financial protection solutions against natural disasters at the national, local government and individual levels,” Alvarez said in her report to Dominguez. “Since its adoption in 2015, the government has made significant progress in implementation, including most notably the signing of the World-Bank supported $500 million contingent credit line last year.”
According to Alvarez, the premium payments will be financed through an NDDRM Fund allocation earmarked for the insurance of government facilities.
Premiums will have two categories: disaster-specific and province-specific.
For disaster-specific premiums, P500 million of the fund will be allocated as follows: 79.2 percent for typhoons and 20.8 percent for earthquakes.
The other P500 million will be province-specific and split equally among the 25 provinces at P20 million each.