The Philippines has successfully placed on the international market its parametric insurance policy with a maximum cover of PHP20.49bn ($391m) to provide quick liquidity to national and local governments, the Bureau of the Treasury has said.
The agency announced that with assistance of the World Bank, the programme includes coverage for national and local government assets against natural calamities including public elementary and high schools in 25 disaster-prone provinces in the country’s eastern seaboard.
National Treasurer Rosalia de Leon said in a report to Finance Secretary Carlos Dominguez III that the parametric insurance policy would enable these 25 provinces and the national government to act faster and respond better to natural calamities. The policy became effective on 19 December 2018.
Ms De Leon said in addition to the reinsurers in 2017, which include Nephila, Munich Re, Swiss Re, AXA and Hannover Re, a new set of reinsurers also provided support for the cover. They are Hiscox Re, Allianz Re Switzerland, AP3 (Tredje AP-fonden) and Scor.
“With the increased market participation, we were able to achieve a tighter multiple this year compared to last year’s transaction,” she said.
Under the programme, the Government Service Insurance System (GSIS) provides catastrophe risk insurance coverage particularly for the Department of Education along with the 25 selected provinces.
The World Bank, through its International Bank for Reconstruction and Development, acts as the intermediary to transfer or cede GSIS risks to the global reinsurance market, thus minimising risks for the Philippine government. As the Bureau of Treasury is the designated policyholder, funds will be mobilised faster to first responders, namely, the national government and local government units.