DOF urges greater regional cooperation on disaster risk financing

The Philippines has called on the Association of Southeast Asian Nations (ASEAN) to foster stronger cooperation on disaster risk financing and insurance (DRFI) strategies, according to the Department of Finance (DOF).

During the recently concluded 23rd ASEAN Finance Ministers’ Meeting in Thailand, Finance Secretary Carlos Dominguez urged member-countries of ASEAN to enhance intersectoral cooperation in the area of DRFI, in light of the region’s vulnerability to natural calamities that lead to loss of lives and economic disruptions threatening growth.

In particular, Dominguez said the region could still improve on its DRFI initiatives, including capacity building activities, as well as information sharing on disaster risk financing strategies.

Dominguez also expressed support for ASEAN’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 liberalizing catastrophic risk insurance would encourage the development of disaster risk information and modeling systems within the ASEAN region.

He said these systems could be used to assess the economic and fiscal impacts of natural disasters, and facilitate the sharing of disaster risk data and information.

The Philippines is among the countries in the region that is most vulnerable to natural disasters.

In December last year, the Philippines successfully placed on the international market its parametric insurance policy with a maximum cover of P20.49 billion. The policy became effective starting Dec. 19, 2018.

This policy seeks to provide quick liquidity to 25 catastrophe-vulnerable provinces and the national government, enabling them to act faster and respond better in times of natural calamities.

According to the DOF, the program includes coverage for public assets against natural calamities, including elementary and high schools.

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, in 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 (BTr) is the designated policyholder representing the 25 provinces, as well as the national government.