Twenty-five disaster-prone provinces will now be able to respond better to natural calamities given the availability of a P1-billion insurance fund, the Finance department said on Monday.
Under the government’s Parametric Insurance Pilot program, typhoon-prone provinces such as Batanes and Albay will be able to quickly secure payouts, Finance Assistant Secretary Paola Alvarez said in a statement.
In addition to Albay and Batanes, the other provinces covered are Aurora, Cagayan, Camarines Norte, Camarines Sur, Catanduanes, Cebu, Davao del Sur, Davao Oriental, Dinagat Islands, Eastern Samar, Ilocos Norte, Ilocos Sur, Isabela, Laguna, Leyte, Northern Samar, Pampanga, Quezon, Rizal, Sorsogon, Surigao del Norte, Surigao del Sur and Zambales.
“Unlike the traditional indemnity insurance that takes a long time to assess and process, this Parametric Insurance Pilot will have quick-disbursing payouts whose amounts will depend on the estimated loss triggers determined through the Philippines’ Catastrophic Risk Model developed by the DoF in 2014,” Alvarez said.
Local governments, she said, can avail of insurance cover for catastrophic earthquakes or typhoons from the Government Service Insurance System with coverage fully ceded to the international reinsurance market, minimizing risks for the government.
“Since the Bureau of Treasury is the policyholder, the funds will be mobilized faster the first responders, namely, the national government and the LGUs (local government units),” Alvarez added.
The program will run for one year starting July 28 this year. It fulfills part of the expected outcomes of the2011-2028 National Disaster Risk Reduction and Management (NDRRM) plan.
“Our disaster risk financing strategy provides a comprehensive framework for the implementation of financial protection solutions against natural disasters at the national, local government and individual levels,” Alvarez said.
“Since its adoption in 2015, the government has made significant progress in implementation, including most notably the signing of the World-Bank supported $500 million contingent credit line last year,” she added.
According to Alvarez, premium payments will be financed through an NDDRM Fund allocation earmarked for the insurance of government facilities.
Premiums will have two categories. For disaster-specific premiums, P500 million of the fund will be allocated as follows: 79.2 percent for typhoons and 20.8 percent for earthquakes.
The other P500 million will be province-specific and split equally among the 25 provinces at P20 million each.