The Philippine government wants to create a national system where various state entities, down to local government units (LGUs), can rely on a rational structure to evaluate risks and access resources for risk protection and management through a public asset insurance programme, Finance Secretary Carlos Dominguez III has said.
In a statement issued by the Department of Finance, Mr Dominguez acknowledged that the government faces an enormous task of formulating this type of public insurance structure, given that the Philippines is now just starting to draw up its registry of national assets.
Ensuring comprehensive and adequate insurance protection for government assets would help shield the fiscal budget from volatile shocks arising from catastrophic events and would also safeguard the government’s long term development objectives, he said.
While some state assets are insured, in most cases, these are either inadequate to indemnify the government or lack the budget for premium payments.
A pilot programme to inventory government assets and properties through a National Asset Registry System is currently being carried out by several Departments, including: Education (DepEd), Public Works and Highways (DPWH), Health (DOH), and Social Welfare and Development (DSWD) along with the National Irrigation Administration (NIA), in coordination with the Bureau of the Treasury.
The relevant information in the registry will help in crafting the appropriate insurance structure for the government.
Last month, on the sidelines of the Annual Meeting of the World Bank Board of Governors, Mr Dominguez asked the World Bank to assist the Philippines in crafting an insurance structure for its public assets in cooperation with private reinsurers to enable the government to respond faster and better to natural disasters.
“We want to develop this strategy in which we can have a way to analyse our risks to decide how much we will take and how much we will pass on to the insurance market, not only for our national government assets but also for assets at the local government level,” Mr Dominguez had said then.
The Philippine government is planning to also work with Lloyd’s of London and the Citi Group to explore the possibility of tapping reinsurance facilities and accessing the capital markets to obtain financial cover for state assets.
Mr Dominguez said it would be “irresponsible” for the government to embark on a $170bn infrastructure programme without a comprehensive disaster risk financing and insurance plan. A Nat CAT risk modelling developed for the Philippines shows that the country is expected to incur, on average, PHP177bn ($3.4bn) in annual losses from damage to public and private sector assets arising from typhoons and earthquakes.
He also said that the creation of a Department of Disaster Management and Resilience (DDMR), legislation on which is pending in both chambers of Congress after being certified as urgent by the President, would complement efforts to improve the government’ insurance coverage, as well as the programme to inventorse the government’s assets and property.