This report tries to map out a variety of challenges and solutions related to the provision of climate risk insurance (CRI) by the municipality of Las Nieves in the Philippines. It carries out a detailed discussion on the potential insurance and non-insurance solutions, coupled with an action-led approach on implementing the recommendations related to the climate risk protection mechanism.
This diagnostics toolkit is designed to help countries assess the financial management of disaster risk and to provide a basis for them to enhance financial resilience through insurance and other risk transfer instruments.
“An average of about 20 storms and typhoons enter the Philippine Area of Responsibility every year. In addition, the country also sits within the so-called ‘Pacific Ring of Fire’, hence is exposed to earthquakes and volcanic eruptions. All of these make the Philippines one of the riskiest countries in the world in terms of disaster vulnerability and natural calamities exposure.”1
The GIZ program RFPI Asia program (Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia) currently prepares new directions for activities in the upcoming months and years.
Between 1997-2016, the Philippines has been ranked fifth among most affected countries from the effects of climate change in the Global Climate Risk Index 2018 study by German Watch. The Philippines along with China, the United States, Indonesia, and India were identified by AIR as the five countries most frequently hit by natural disasters due to location, country size, the presence of multiple risks, resilience against the effects and its access to insurance instruments.
Asia Insurance Review, together with RFPI Asia as co-organizer, put together its First Inclusive Insurance Conference to look into how the insurance industry, powered by digitalization and blockchain technology, deliver protection to everybody, especially the poor and vulnerable, against extreme weather events and other risks. And equally as important, the conference also looked into how the regulatory framework is adapting to the advance technological changes to drive growth, create new value and promote financial inclusion.
Key insurance stakeholders have declared that the use of technology is a game changer in the industry as it paves way to new business models, innovative products and services, as well as more tailored and interactive ways of engaging customers .
Microinsurance distribution in the Philippines is primarily through microfinance institutions (MFIs) and pawnshops. This creates the concentration of microinsurance access within a specific population segment within a similar location due to focused distribution channels. It limits expansion and access to the full market of microinsurance and creates unhealthy pooled risks. Expansion through new distribution channels is required to effectively and efficiently reach a wider pool of customers, and expand protection in different market segments and with a wider range of products.
This industry brief builds on the knowledge and subject matter expertise of business leaders, subject matter experts, regulators and customers. The findings and analysis are the result of insights gathered while consulting with the different actors in the Microinsurance value chain. The study will primarily entail surveys, in-depth interviews and focus-group discussion to be able to determine what each stakeholder has been doing in the past one year and know what else is in the pipeline.
After Typhoon Haiyan (named locally Yolanda) hit the Philippines in November 2013, many stakeholders of Disaster Risk Management (DRM), at different levels, took a long series of measures for organization and activity improvements. International support had a large contribution not only financially, but also related to the improvement of capacity building.
The partner countries Indonesia, Philippines and Vietnam, are increasinglyaffectedbyclimatechange.Theyrank 33rd,3rd, and18th, respectively,amongthe171mostat-riskcountries (WorldRiskReport 2017).Withtheagriculturalsectorastheir mainsourceofemployment, thesecountriesarehometothe extremelypoor,poor,andpovertyendangeredhouseholds.
Twenty four senior staff of insurance regulators, two finance ministry officials and 22 representatives of insurance associations and companies from six Asian countries met in Manila on 11-14 July 2016 to discuss proportionality in prudential regulation, licensing, distribution and supervision and the implications on microinsurance development.
Public-private dialogue (PPD) is a major platform to attain the rationale of the Mutual Exchange Forum on Inclusive Insurance (MEFIN), a network of insurance regulatory authorities in Asia working for peer-to-peer exchange of knowledge and experience with the insurance industry.
The SME sector is considered the ‘engine of growth’ in most economies in Asia. Micro and SMEs compose 97%-99% of total enterprises in the APEC region, and contributes more than 50% to the GDP (China, Indonesia, Japan, Korea, and the United States) and to employment creation. However, despite the huge economic relevance of SMEs, access to financial services remains a perennial problem.
The public private dialogue (PPD) on microinsurance or inclusive insurance is a major platform of the MEFIN Network for peer-to-peer learning among insurance regulators. The PPD provides opportunity both to the regulators and the insurance industry to exchange knowledge and discuss issues and solutions in further developing the market of microinsurance in its respective jurisdictions. It is conducted twice a year.
The public private dialogue (PPD) on inclusive insurance, which is conducted twice a year by the MEFIN Network (Mutual Exchange Forum on Inclusive Insurance), aims to provide opportunity to insurance supervisors, insurance industry and other stakeholders to exchange knowledge and discuss issues and solutions in further developing the market of microinsurance in its respective jurisdictions.
The public private dialogue (PPD) on inclusive insurance is a biannual knowledge exchange platform by the MEFIN Network (Mutual Exchange Forum on Inclusive Insurance), which aims to facilitate a multi-stakeholder discussion on developing an enabling environment for inclusive insurance.