An initiative spearheaded by the Philippines and Japan on proposed measures that aim to strengthen the financial resilience to natural disasters of the 21 member-economies of the Asia-Pacific Economic Cooperation (APEC) forum will be on the priority list for discussion in the APEC finance ministers’ meeting in Chile this October, according to Finance Assistant Secretary Paola Alvarez.
Chile, which is hosting this year’s APEC meetings, decided to include disaster risk resilience as among the priorities to be discussed by the finance ministers of the 21 Pacific Rim economies, following the conclusion of the APEC Finance and Central Bank Deputies Meeting (FCBDM) held last month in the South American country’s capital city of Santiago.
Alvarez, who heads the Philippine delegation to the FCBDM, said the inclusion of disaster risk resilience in the list of APEC’s priorities this year underscore the need for Pacific Rim economies to come up with policies and solutions to mitigate the adverse economic impact of natural disasters and help them recover quickly from such losses.
Most APEC economies are situated around the “Pacific Ring of Fire,” which is the world’s most active fault line where 90 percent of earthquakes and volcanic eruptions occur.
As co-chair this year of APEC’s Disaster Risk Financing and Insurance (DRFI) Solutions Working Group, the Philippines hosted the APEC DRFI Study Course on the Financial Management of Disaster Risks during the FCBDM in Santiago City last March, Alvarez said.
Japan and the Philippines have co-chaired this working group since 2017. The first APEC DRFI Technical Working Group was formed in 2016 with Peru and the Philippines as co-chairs.
The course, which is part of APEC’s series of study courses on earthquake, El Niño, and flood insurance schemes for property and agricultural assets, is among the deliverables this year of the working group co-chaired by the Philippines and Japan.
Alvarez said, “The course intended to familiarize the participants on the different financial strategies on disaster risk resilience not only from the perspective of the Philippines but also from other member economies.”
“The discussions touched on the role of the state, the private sector, and regional cooperation in providing DRFI solutions to mitigate the adverse impact of natural disasters on people and the economy,” Alvarez said.
Among the participants in the study course were representatives from the United States, Japan, Chile, Malaysia, Indonesia, Asian Development Bank (ADB), World Bank, International Monetary Fund (IMF), and the APEC Business Advisory Council (ABAC).
Alvarez, the focal person of the Department of Finance (DOF) on disaster risk resilience, shared with officials of APEC economies the Philippine government’s efforts in institutionalizing mechanisms and policy initiatives to promote collaboration with the private sector and communities so as to empower them to become more responsive and resilient in the face of various disasters that beset the country.
She also shared the government’s ongoing initiatives with the ADB on institutionalizing the Philippine City Disaster Insurance Pool (PCDIP), and the country’s experience in developing the Philippine Catastrophe Insurance Pool through the collaboration of the World Bank, Insurance Commission (IC), and Philippine Insurers and Reinsurers Association (PIRA).
Alvarez also cited the crucial role by the private sector in mitigating, or responding to, the debilitating effects of disasters. For instance, in the aftermath of supertyphoon Yolanda, “micro-insurance companies facilitated the disbursement of funds to the local households, especially the unbanked, more quickly,” Alvarez said.
“We also underscored the need to also protect the interests of the people against the possible risks that may come with such schemes. Nonetheless, given the enormity of disaster-related concerns, the government continues to reach out to the private sector to encourage active participation in DRFI initiatives,” she said.
During the FCBDM, Alvarez also discussed with her APEC counterparts the Philippines’ Parametric Insurance Pilot covering 25 disaster-prone provinces, a program implemented starting in 2017 with the assistance of the World Bank.
Alvarez explained, that this mechanism, “as opposed to the traditional indemnity insurance, does not require long and tedious assessment to determine actual loss and corresponding claims. As such, this provides local government units (LGUs) with funds that can be easily disbursed especially during testing times.”
The APEC member-economies are: Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; South Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Russia; Singapore; Chinese Taipei; Thailand; United States and Vietnam.