The country’s non-life insurance sector must help manage loss and damage caused by climate change, Secretary Emmanuel De Guzman of the Climate Change Commission (CCC) told a forum hosted by the Philippine Insurers and Reinsurers Association (Pira) in Taguig City on Wednesday.
The Philippines, one of the nations most vulnerable to climate change, sustains annual losses from the impact of hydrometeorological hazards. Super Typhoons like “Yolanda” (“Haiyan”) and other extreme weather events claim thousands of lives yearly and cost the country billions of pesos, thus derailing years of socioeconomic development.
De Guzman said non-life insurers can help citizens prepare for financial challenges during natural disasters.
The Pira forum was a side event of the United Nations Framework Convention on Climate Change 2016 Forum of the Standing Committee on Finance hosted by the CCC and the Asian Development Bank at the ADB Headquarters in Pasig City earlier this week.
By doing its fair share in addressing residual losses and damages, De Guzman said, the insurance industry would help unburden the government, which usually has inadequate funds for disaster relief.
The World Bank reported that the Philippine government retains most of its disaster risk because it relies heavily on annual contingency budget allocation for potential disaster events and post-disaster reallocations to finance its response efforts.
One example, De Guzman said, is the National Disaster Risk Reduction and Management Fund, which was established under Republic Act 10121 to fund disaster and emergency response. The 2016 General Appropriations Act allocates of P38.9 billion to the fund.
“This is not enough to help our citizens get back on their feet. The government can step in and reconstruct roads, bridges, and other damaged infrastructure, or offer assistance through the mechanisms of DSWD, Pag-IBIG, SSS, GSIS and other agencies, but it cannot on its own, reconstruct lives,” he pointed out.
De Guzman said the CCC can collaborate with the insurance industry on a baseline policy study on risk, transfer, finance and insurance in the country that will examine gaps and propose solutions, including policy reforms.
He said the CCC and the insurance industry also need to get more local government units to deploy weather-indexed insurance initiatives.
He cited in particular the People’s Survival Fund (PSF), which finances adaptation measures at the local community level.
The CCC official said establishing LGU ownership is key to letting PSF grants broaden development of risk transfer instruments and risk financing mechanisms in a financially sustainable way.
“In other words, a long-term coverage should be in place that would no longer require the assistance of the PSF,” he added.
De Guzman also challenged the insurance industry to work on slow-onset impacts of climate change, which, he said, “many believe to be uninsurable.”
Examples of slow-onset events are sea level rise, increasing temperatures, ocean acidification, salinization, land and forest degradation, loss of biodiversity and desertification.