The Insurance Commission (IC) is targeting to roll out in the first quarter of 2021 the Philippines’ first private sector-led catastrophe insurance facility that is designed to heighten the country’s financial resilience against natural disasters.
IC Commissioner Dennis Funa said the Commission, the National Reinsurance Corp. of the Philippines (Nat Re) and the Philippine Insurers and Reinsurers’ Association (PIRA) have worked together in finalizing the Philippine Catastrophe Insurance Facility (PCIF), which would allow non-life insurers to cede their catastrophe risks to this insurance pool or facility.
The PCIF, which will then share the pooled risks back to the non-life insurers, will enable these companies to more efficiently manage their catastrophe exposures and boost their capacity to take in more catastrophe risks.
“We recognize the significant role that the non-life insurance industry should play in ensuring the Philippines’ catastrophe resilience and in bridging the catastrophe insurance gap that we need to urgently address as our country is among the most vulnerable to the onslaught of natural calamities,” Funa said during his presentation of the IC’s 2021 plans and targets to Finance Secretary Carlos Dominguez III.
Funa said that with the PCIF in place, communities, businesses and even households can hasten their recovery after large losses arising from catastrophic events such as typhoons and earthquakes.
The PCIF also aims to create a more risk-appropriate rating environment that would ensure sustainable catastrophe premium rates and provide the public wider access to catastrophe insurance protection, Funa said.
Last year, the IC, Nat Re and PIRA signed a memorandum of understanding (MOU) committing them to cooperate on the establishment of the PCIF.
Domestic insurance companies that provide catastrophe coverage currently reinsure their risks overseas.
The goal of the PCIF is to pool resources available in the country to keep most of the funds here and enable non-life insurers to grow the premium base, which would then allow them to expand the range of catastrophe insurance products available to Filipinos.
The PCIF is expected to benefit micro, small and medium enterprises (MSMEs) and households that are mostly among the most vulnerable when disasters strike.