MANILA — Insurance Commission’s (IC) Dennis Funa said the Commission, the National Reinsurance Corp. of the Philippines (Nat Re) and the Philippine Insurers and Reinsurers’ Association (PIRA) have joined forces to finalize the Philippine Catastrophe Insurance Facility (PCIF) which would allow non-life insurers to “cede their catastrophe risks to this insurance pool or facility” in a press statement by the Department of Finance.
Last year, the IC, Nat Re and PIRA signed a memorandum of understanding (MOU) for the establishment of the PCIF.
“We recognize the significant role that the non-life insurance industry should play in ensuring the Philippines’ catastrophe resilience and in bridging the catastrophe insurance gap that we need to urgently address as our country is among the most vulnerable to the onslaught of natural calamities,” Funa said during his presentation of the IC’s 2021 plans and targets to DOF Sec. Carlos Dominguez III.
The PCIF, aimed at heightening the country’s financial resilience against natural disasters, will have a target roll-out in the first quarter of 2021.
According to the IC, the PCIF will allow companies to “more efficiently manage their catastrophe exposures and boost their capacity to take in more catastrophe risks” by sharing the pooled risks to non-life insurers.
Funa noted that the PCIF will help communities, businesses, and households “hasten their recovery” from large losses following catastrophic events such as typhoons and earthquakes.
“The PCIF also aims to create a more risk-appropriate rating environment that would ensure sustainable catastrophe premium rates and provide the public wider access to catastrophe insurance protection,” Funa added.
The IC also noted that the PCIF is expected to benefit micro, small and medium enterprises (MSMEs) and households that are mostly among the most vulnerable when disasters strike as its goal is to “pool resources available in the country to keep most of the funds here and enable non-life insurers to grow the premium base, which would then allow them to expand the range of catastrophe insurance products available to Filipinos.”
“Domestic insurance companies that provide catastrophe coverage currently reinsure their risks overseas,” according to the DOF statement.