A project seeking to come up with affordable insurance for disaster-prone and poor municipalities to help them recover from natural disasters faster was launched on Friday.
UP-Center for Local and Regional Governance (UP-CLRG) and non-government organization Oxfam presented the Meso-scale Insurance for Disaster Readiness and Recovery (MINDER) Project, an endeavor that aims to design insurance model and revenue generation systems to allow poor municipalities to avail of disaster insurance.
MINDER is modeled after parametric or index-based insurance for typhoons and disasters. In this scheme, municipalities immediately get payouts based on a set of values of a trigger event, e.g. a set amount of money for the wind speed and amount of rainfall in a typhoon.
Oxfam noted that insurance may decrease the fiscal vulnerability of local governments following devastating natural events, for which the Philippines ranked third on the World Risk Index in 2016 due to its vulnerability to disaster risk.
The study noted that the Philippines experienced 410 occurrences of natural disasters that lead to over 40,000 deaths and $23 billion worth of damages from 1986 to 2015.
Dr. Mahar Lagmay explained that insurance can mitigate the risk posed by natural and man-made disasters.
"Kapag 'yung property mo is at risk, ibibigay mo ngayon 'yung risk na iyon dun sa mga gustong umako ng gastusin, at 'yun 'yung mga insurance," said Lagmay, UP Nationwide Operational Assessment of Hazards (NOAH) director and UP Resilience Institute executive director.
"Pag naibigay 'yung pag-transfer na 'yun sa mga gustong umako nung panganib o 'yung pagbayad nun, at nabayaran 'yun kung saka-sakaling merong sakuna, eh mas makakabangon yung komunidad," he added.
Assistant Secretary Romell Cuenca, Climate Change Commission (CCC) deputy executive director, said insurance was difficult to claim via traditional means.
"The conventional way of doing things was that [after] the event happens, an appraiser will assess the extent of the damage for them to be able to determine how much they'll indemnify the insured," Cuenca said.
Part of MINDER's goal is to give LGUs a new model of typhoon and disaster insurance and to explain why municipalities need insurance in the first place.
"Part of the challenge here is to educate LGUs how [to] spend the DRRM and what's the value of insurance. Some of the studies [showed that] in some LGUs, mas mabilis silang naka-recover because they have insurance facilities," Dr. Erqin Alampay, UP-CLRG director, said.
"Insurance is a means to make LGUs places resilient and to rise up faster," Alampay added. "Remember: when facilities get damaged, there's no actual[item] on the GAA (General Appropriations Act) for those facilities once it's damaged. It takes a while to find money to rebuild."
At the moment, the project requires five years-worth of properties' loss and damage data to complete its model for computing payouts from six pilot areas — Iguig, Zarraga, Salcedo, Quinapondan, Jabonga, and Marihatag — and data on wind speed and rainfall amount from PAGASA.
For now, MINDER raised the need to heighten LGUs' awareness of insurance-based vulnerabilities, explore possible uses of their disaster risk reduction and management fund (DRRMF), and strengthen the use of climate information by LGUs in preparation for weather events.
Policy changes needed
Cuenca said policy changes are needed to ensure that municipalities are ready once the parametric insurance model is ready for use.
"From the policy side, we have to make sure that we're ready with the policy issuance to enable the environment for operationalizing these initiatives," he said.
The insurance scheme must also be made attractive to private investors and the academe.
"[We have] to make it easy for the private sector to come in; the academe could come in with their studies, with their empirical and scientific evidence; development partners can come in to share with us the lessons they've learned in other jurisdictions," Cuenca said.
Filipinos must also be able to understand the concept of disaster insurance and even climate change, especially residents of municipalities often hit by natural disasters caused by the changes in weather conditions.
"We should bring it down to the household level. Most people talk about the weather in many cases. So let's bring it a notch higher, talking about weather effects and the effects of climate change on our daily lives, on our economic status, on our difficulties, on human security," Cuenca noted. —KBK, GMA News