By William Martirez, Country Manager, MicroEnsure Insurance Brokers Philippines, Inc.. (Southasiadisasters.net issue No. 106, March 2014)

The Philippines is one of the most affected countries by climate change as it is very vulnerable to natural calamities. As a consequence, its residents suffer from typhoons and droughts every year. Statistics shows that in 2011, a total of 554 extreme climate events were recorded across the country.¹ Typhoon damages alone left 1,541 death tolls and affected 10 million individuals with more than $600 million worth of property damages. The economic situation of the communities is such that a single catastrophic event is enough to put the families into the poverty trap.

The government has established programs and initiatives to help reduce the consequences of climate change such as the Climate Change Act 2009 which was amended with the utilization of People’s Survival Fund, and the Philippine Disaster Risk Reduction and Management Act 2010 with the utilization of Local Disaster Risk Reduction and Management Fund (LDRRMF). These laws specifically enable the design of relevant and appropriate risk-sharing and risk-transfer instruments such as insurance. One of its strategic priorities is to strengthen the crop insurance system as an important risk sharing mechanism to implement weather-based insurance system². The LDRRMF specifically provides a fund for the payment of premiums on calamity insurance³ which can be tapped for risk mitigation purposes through a meso level program (i.e. for LGUs) which will cover losses of the agricultural sector.

In the microinsurance industry, in response to climate change, MicroEnsure Philippines has developed the following innovative microinsurance products, namely, Weather Index Insurance for agriculture, Calamity Insurance and MicroHousing Insurance for properties which is bundled with Personal Accident insurance to provide appropriate and affordable insurances to the poor and protect them from the financial risks they face. Calamity insurance is an index insurance product that is responsive at micro level which covers clients’ residential property against 8 perils: typhoon, flood, earthquake, volcanic eruption, landslide, tsunami, fire and lightning. Just this year, MicroEnsure also provides for the catastrophic insurance through meso level approach.

On 2011, MicroEnsure Philippines has paid a total of 18 million pesos in calamity insurance claims (approximately $400,000) to help almost 1,800 families who suffered losses as a result of Typhoon Washi (Sendong) which allowed these families to rebuild and move forward after the devastation. This year, with the recent calamity, it has paid a total of 33 million pesos (more than $700,000) nationwide. These products had already proved an important competitive advantage for MicroEnsure’s partners in the Philippines. Without access to appropriate low-cost insurance products, low income households are without a safety net and a single setback can cost them what little savings or capital they have.

1 Mahl, Thomas (2011). Calamity Fund Protection, November 22, 2011.
2 National Framework Strategy on Climate Change.
3 Section 21, Republic Act 10121 or “The Philippine Disaster Risk Reduction and Management Act of 2010”.

Disclaimer: The views expressed in this piece are those of the author/s and do not necessarily reflect the views or policies of AIDMI.