Malacañang to create disaster insurance facility for SMEs, households

MANILA, Philippines - President Aquino is poised to issue an order that will soon require households and small and medium enterprises (SMEs) to be insured against natural disasters, officials said.

“Finance Secretary Cesar Purisima endorsed the draft executive order (EO) creating this disaster insurance pool to cover for earthquake, typhoons and floods induced by typhoons,” Insurance Commissioner Emmanuel Dooc said in a briefing last week.

“We are happy to note that the lawyers are satisfied with the provisions in the draft executive order,” he added.

Under the EO, a “mandatory” disaster insurance coverage of at least P1 million will be required for SMEs and households.

Dooc said the government is working with the Bangko Sentral ng Pilipinas to require insurance coverage before a borrower could get bank credit.

“We have to emphasize that this is being done to help the SMEs and the citizens and should not be considered as an additional burden to them,” Purisima said in the same briefing.

To make it easier and cheaper, premiums paid for insurance could be lowered subject to “some deductible features,” Dooc said. He, however,  did not elaborate.

According to the Department of Trade and Industry, around 98 percent of Philippine firms are SMEs which are prone to natural catastrophes that hit the country every year.

During last month’s meetings of the Asia-Pacific Economic Cooperation in Manila, support to SMEs and disaster preparedness were deemed necessary to attain inclusive economic growth.

 The Philippines currently chairs the Vulnerable 20 Group of climate-susceptible nations. Purisima, who represents the country in the V20 group, stressed the need to mobilize funds to fight climate change.

During the last meeting of the Conference of Parties in Paris, it was agreed that developed nations would contribute $100 billion annually to fight climate change beginning 2020. Currently, around $60 billion has already been given, the finance chief said.

“The other aspect of the finance part is risk pooling: the ability to create viable and sustainable risk pooling mechanism,” he said.

“So early next year, after we clear it with the rest of the members, we will be issuing a letter where we will share our thoughts on what’s need to be done to make sure that the courageous and ambitious agreement signed in Paris is actually brought to reality,” he added.