In response to being one of the most vulnerable countries to earthquakes and typhoons, the Philippines’ catastrophe risk insurance program was created. The Government Service Insurance System (GSIS) will provide the government and 25 participating provinces with catastrophe risk insurance.
The World Bank estimates that 20 typhoons each year cause landfall in the Philippines, bringing with them $3.5 billion in losses. As part of the government’s disaster risk finance strategy, the new insurance program strengthens the country’s financial protection and disaster risk reduction management.
The International Bank for Reconstruction and Development (IBRD), part of the World Bank Group, and the U.K. Department for International Development support the program.
The new Philippines’ catastrophe risk insurance program ensures governments fast cash in an emergency. The transactions $206 million investment protects the national government’s assets from typhoons and earthquakes, as well as that of the 25 participating provinces.
Natural disasters weaken infrastructure and inhibit economic growth and development in poorer areas. Forty percent of the population survives on less than $2 per day, and many of these people live in high-risk areas. Approximately a third of the nation’s workers are in the agricultural sector, which is vulnerable to severe weather.
The Philippines’s new insurance program is related to the Insurance Development Forum (IDF), a public-private partnership closing the protection gap between insured disaster losses and the economic costs of disasters. With support from the World Bank Group and the United Nations Development Programme, IDF improves risk management capabilities and economic resilience for vulnerable people, communities, businesses and public institutions.
According to Joaquim Levy, Managing Director and Chief Financial Officer of the World Bank Group, “this new insurance program illustrates how the World Bank Group can leverage capital from the market…to sustain essential services in times of crisis, empowering local governments to more effectively assist their citizens.”
Protecting the nation’s financials and empowering local governments, the Philippines‘ catastrophe risk insurance program advances development and poverty reduction, even in the hardest-hit places.
– Sarah Dunlap