Philippines unveils catastrophe insurance programme
A World Bank-backed $206mn catastrophe risk insurance programme has been launched in the Philippines to help the country better respond to losses from severe weather, earthquakes and other natural disasters.
Reinsurers Nephila, Swiss Re, Munich Re via its NewRe subsidiary, Axa and Hannover Re make up a panel chosen through competitive bidding that will take on the risk via the World Bank's International Bank for Reconstruction and Development.
The Philippines' Government Service Insurance System will provide the government and 25 provinces with insurance against major typhoons. It will also cover losses of national government assets resulting from earthquakes.
Insurance payouts will be made when pre-defined parametric triggers are met.
The Philippines is among the countries most vulnerable to natural disasters, and on average expects to incur $3.5bn in asset losses each year from typhoons and earthquakes alone.
The cat loss reinsurance programme is the first of its kind to be set up in the country and follows six years of collaboration between the national government and the World Bank, as well as the development of a cat risk model for the country by Verisk Analytics unit AIR Worldwide.
The World Bank said it was the first time it had entered into a reinsurance agreement with a governmental agency and executed a cat risk transaction in local currency.
According to Swiss Re's Global Partnerships division, the Philippines is aiming to expand its catastrophe risk insurance programme to include a sovereign cat bond.
The authorities aim to eventually issue a cat bond at a national level, in addition to a $500mn catastrophe deferred drawdown option (Cat DDO) with the World Bank, which is a credit line provided immediately after a disaster.
The country wants to extend the subnational coverage to all of its 81 provinces in future.