Last week we began discussing “Aiding the Disaster Recovery Process,” a study by the Microinsurance Network on how microinsurance providers responded in the wake of 2013’s Typhoon Haiyan in the Philippines.
Today we’ll take a look at how insurance was structured in the islands before the storm.
The Microinsurance Regulatory Framework, developed in 2010 by the Philippines’ Department of Finance and the Insurance Commission, covers the provision of insurance, insurance-like and other activities that provide risk protection of the poor supplied by the private sector, including clarifying the insurance providers and distributors eligible to offer microinsurance and the product types that can be developed. Products that form the microinsurance landscape include:
- Credit insurance. One organization has bundled coverage on all loans that includes credit life, calamity, accident, health and payment of loan amortization for one month in the event of a calamity.
- Life insurance. Offers are typically part of a bundled package covering the member dependents including life insurance, accident and a hospital/medical benefit.
- Accident insurance. For personal accident insurance or riders attached to life insurance policies, most companies have varying definitions in relation to accidents occurring in natural disasters.
- Calamity coverage. Although definitions vary by insurer, most policy contracts indicate typhoons or floods, or have the catch-all phrase “acts of nature.” This coverage is most often part of a bundled insurance package with a flat benefit amount of PHP 4,000 to 5,000 (USD $90.40 to $113.00), increasable to PHP 10,000 (USD $226.00).
- Funeral benefits. Offers are typically part of a bundled package.
The table below summarizes the providers, products and intermediaries involved in the Typhoon Haiyan
Natural catastrophe insurance in the Philippines is provided by insurance companies. In 2010, a prototype calamity product was developed by the Philippine Insurers and Reinsurers Association (PIRA), which is available to all providers. This comprises one-year property insurance with personal accident. In the event of a named peril occurring, PHP 10,000 (USD $226) would be paid per unit with a maximum of three units per family.
Unlike the more traditional areas of insurance, not all companies operating in the Philippines microinsurance market had catastrophe reinsurance. Additionally, the Philippines does not have a national pooled program to cover natural catastrophes, although the Asian Development Bank (ADB) announced in 2013 that a public-private earthquake insurance pool would be launched in 2015.
Insurance in the Philippines is regulated by the Insurance Commission (IC), which is mandated to “regulate and supervise the insurance and pre-need industries in accordance with the provisions of the Insurance Code and the Pre-Need Code of the Philippines.”
Next week we will examine how all these elements meshed to take action after Typhoon Haiyan struck.