THE PHILIPPINE Catastrophe Insurance Facility (PCIF) may set rates according to the local hazard profile, which will price in risk associated with disaster-prone areas, insurance industry officials said.
“The efficient management of catastrophe exposures will further result in a more risk-appropriate rating environment, that will ensure sustainable catastrophe premium rates. This will provide the public with wider access to catastrophe insurance protection,” Insurance Commissioner Dennis B. Funa said at an online forum.
“The Technical Working Group with the help of some brokers and also the World Bank is now modelling the rates for the catastrophe perils. The idea is to vary the rates by risk zones — a risk zone is almost like a province — to reflect the risks involved in the rates,” Philippine Insurers & Reinsurers Association Chairman Allan R. Santos said.
Rates are currently set for each catastrophe type instead of by zone.
Mr. Santos said the risk zone-specific rates will only be applicable for typhoon, earthquake, and flood coverage.
He said the PCIF is targeted for launch by April 2022.
The PCIF is intended to expand the industry’s ability to take on more risk. Currently, insurance firms need to seek reinsurance coverage overseas for their natural disaster-related insurance products.
“The PCIF was designed to heighten our country’s financial resilience against natural disasters as well as to address the catastrophe insurance gap,” Mr. Funa said.
Apart from the PCIF, Mr. Funa said the insurance industry has also been working to develop microinsurance cover to reach members of communities that are most vulnerable to climate change and natural disasters.
The Department of Finance estimates that the Philippines may sustain P177 billion worth of losses to public and private assets due to typhoons and earthquakes each year. — Luz Wendy T. Noble