In the event of a destructive typhoon, it is the agriculture sector that remains most vulnerable to loss and damages.
Initial reports from the National Disaster Risk Reduction and Management Council indicates that Typhoon Lando (Koppu) left an estimated P5.3 billion worth of damages in agriculture and infrastructure, most of which are in the provinces of Aurora and Nueva Ecija. The agriculture sector took the hardest hit in Regions I, II, III and the Cordillera Administrative Region (CAR).
The 2011-2016 Philippine Development Plan recognized that, “the resiliency of the agriculture sector is threatened by climate change and extreme weather events.”
For each calamity that occurs in the country, the country’s Gross Domestic Product (GDP) goes down by about 0.1 to 0.2 percent. During Yolanda (Typhoon Haiyan), the GDP went down to as much as 0.5 percent whilepoverty incidence went up to 28 percent. And most Filipinos gain their income and livelihood from the agriculture sector. Hence, there is a need for an affordable and accessible risk-protection mechanism, such as insurance, to protect the welfare of Filipino farmers and fisherfolks.
The Insurance Commission has already taken the first step to address this challenge through the issuance of Circular Letter No. 2015-53 or the “Adoption and Implementation of Agriculture Microinsurance Framework.”
The Micro-Agri Framework encourages public-private collaboration in the design and provision of affordable and appropriate agri-microinsurance products. Products may be a standard indemnity based microinsurance where insureds are indemnify based on partial or actual loss covered or index-based microinsurance that indemnify insureds when a pre-defined parameter or index has been breached.
Life and non-life insurance companies can tie-up and design bundled products that will both have life and non-life features. The framework also envisions that microinsurance providers can tap the growing number of delivery channels to effectively market Micro-Agri products to farmers, fisherfolks and other stakeholders in the agricultural value-chain. Commercial insurance companies can also engage the assistance of the government in gathering data relevant to the design of product through PAG-ASA, Philippine Crop Insurance Corp. (PCIC), Climate Change Commission and other relevant government agencies.
The framework provides specific guidelines in protecting the interest of the consumers while giving leeway to providers in designing its product and strategy for delivery.
With the growing number of institutional delivery channels for microinsurance such as the rural banks, nongovernmental organizations and other microfinance institutions, private commercial insurance providers would be able to effectively reach the target market of agri-microinsurance.