Philippine Insurers and Reinsurers Association Executive Director Mitch Rellosa
MANILA -- An initiative of the private sector to provide catastrophe insurance for properties is targeted to be launched within 2020 to address impact of disasters like earthquake and flooding.
Officials of several non-life insurance companies have been pushing for this bid for several years now and Philippine Insurers and Reinsurers Association (PIRA) Executive Director Mitch Rellosa is optimistic for the success of the initiative, citing the impact of recent disasters.
On Tuesday, officials of PIRA, the Insurance Commission (IC), and the National Reinsurance Corporation of the Philippines (NatRe) signed a memorandum of understanding (MOU) to start the establishment of the Philippine Catastrophe Insurance Facility.
Rellosa said a technical working group (TWG) will be formed as soon as possible to study the framework, regulations, policies, and rates, among others.
He thus encouraged officials of the various non-life insurance companies in the country to be part of the TWG, adding a group effort is needed for the facility to succeed since it has received the support of the government.
To date, insurance companies that operate in the country provide catastrophe coverage but Rellosa said these companies reinsure abroad.
“So we thought of why don’t we maximize the retentions of the individual companies to put it all together so in that way, we don’t have to pay foreigners, we’re able to keep the premium within the country. That way, we grow our premium base and then we also create capacity for our countrymen,” he said.
Rellosa admitted there are certain limits on how much can be reinsured by domestic players but said “we try to keep what we can keep locally.”
He said the advantage of having the facility is for the sector to have shared burden and responsibility instead of the risk being handled by only a few.
This will encourage more players to provide the product and for the public to get insurance coverage, he added.
Asked for projections on the domestic catastrophe requirements, Rellosa said they still do not have details on this, adding “the agreement (among the players) is to work together to come up with that as the soonest possible time.”
This catastrophe insurance will benefit individuals who have personal properties and the small and medium enterprises (SMEs) since they are vulnerable to the impact of any disaster, he said.
Rellosa said the Government Service Insurance System (GSIS) provides catastrophe insurance but only for state properties like roads and bridges.
Insurance Commissioner Dennis Funa said the MOU will “provide the framework for greater financial resilience to the vulnerable sectors of our society.”
“We want our target crowd to appreciate the importance of property insurance as a risk transfer mechanism in the event of disaster,” he said.
Funa declined to give specifics on the facility, saying it is still in its inception stage.
He said the facility will probably be over PHP1 trillion due to the volume of households in the country that may get insurance coverage.
While there remains no legislation for the compulsory insurance coverage for households, Funa said this can be proposed since this is the missing link to address needs during disasters.
He added the impact of disasters on the economy depends on each situation, such as the Typhoon Yolanda, one of the world’s strongest tropical cyclone that devastated not only the Philippines but several other Southeast Asian counties in November 2013. (PNA)
