Philippine government purchases US$386 million parametric cover

Increased participation by reinsurers hailed for increasing coverage limit

Philippine government purchases US$386 million parametric cover

Insurance News

By Gabriel Olano

The Philippines has purchased a parametric insurance policy for important government assets, with a total coverage of PHP20.49 billion (US$386 million).

The policy is backed by several major names in the international reinsurance market, such as Nephila Capital Ltd, Munich Re Group, Swiss Re Group, AXA, Hannover Re, Hiscox Re, Allianz Re Switzerland, Tredje AP-Fonden (AP3) and SCOR SE, the Philippine Star reported.

According to National Treasurer Rosalia de Leon, the parametric insurance policy will enable 25 disaster-vulnerable provinces and the national government to respond better to natural catastrophes. It covers national and local government assets such as schools and other vital infrastructure.

De Leon said the larger value of coverage was due to more reinsurers giving support to the policy, compared to last year.

“With the increased market participation, we were able to achieve a tighter multiple this year compared to last year’s transaction,” she said in a report to the Finance Department, adding that the premium payment of around PHP2 billion (US$38 million) was taken from the National Disaster Risk Reduction and Management Fund for 2018.

The development is a positive for the government’s plan to sell indemnity and catastrophe bonds, which will help bridge the financing gap in recovering from natural disasters, De Leon said.

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