The Philippines is preparing an insurance plan that will help shield the nation from infrastructure losses caused by natural disasters. The Southeast Asian country experiences around 20 typhoons every year, and this coverage is governmental response to its dangers and the ongoing risks associated with climate change.
A national indemnity insurance program will be put in place to provide financial protection for important assets like schools, hospitals, roads, and bridges. Finance secretary Benjamin Diokno said that this program will “ensure immediate funding for the rehabilitation and repair of these critical assets.”
In a report from Bloomberg, Diokno said that PHP2 billion (around $37 million) is being proposed to cover the payment of premium under the 2024 national budget. The Government Service Insurance System (GSIS) will be the insurer, while the Bureau of the Treasury will be the policyholder.
Diokno said that the government has chosen to go the route of indemnity insurance plans instead of another catastrophe bond. After Typhoon Rai hit the country in December 2021, the city of Manila received a $52.5 million payout from a World Bank-issued catastrophe bond, which amounted to 35% of its principal.
According to an estimate from the World Bank, the Philippines expects to incur $3.5 billion in asset losses annually from typhoons and earthquakes. Its unique location in Southeast Asia has made it a magnet for typhoon activity as well as more extreme weather events stemming from climate change. A local insurance boss has recently opined that the country is now the most vulnerable nation from natural catastrophes stemming from poor reinsurance policies.
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