Typhoon-prone Philippines plans cover on infrastructure losses

Manila received a $52.5 million payout, or 35% of the principal, from a World Bank-issued catastrophe bond after Typhoon Rai hit in December 2021. - AFP

MANILA (Bloomberg): The Philippines is readying an insurance plan that will protect the South-East Asian nation from infrastructure losses caused by natural disasters, seeking to better respond to climate change risks.

The government will put in place a national indemnity insurance programme to provide financial protection for strategically important assets like school buildings, hospitals, roads and bridges, Finance Secretary Benjamin Diokno said in a mobile-phone response to Bloomberg queries. The programme will "ensure immediate funding for the rehabilitation and repair of these critical assets,” he said.

Diokno said about 2 billion pesos (US$37 million) to cover payment of premium is being proposed for inclusion in the 2024 national budget. State pension fund Government Service Insurance System will be the insurer while the Bureau of the Treasury will be the policyholder, he said.

The government is pursuing the indemnity insurance plan instead of another catastrophe bond issue, Diokno said.

Manila received a $52.5 million payout, or 35% of the principal, from a World Bank-issued catastrophe bond after Typhoon Rai hit in December 2021.

That bond, issued in 2019 and which lapsed last year, was intended to provide the Philippines with up to $75 million to cover losses from earthquakes and $150 million for losses from tropical cyclones.

Hit by an average of 20 typhoons every year, the Philippines is among countries most exposed to more extreme weather events due to climate change. The country is expected to incur $3.5 billion in asset losses, on average, annually from typhoons and earthquakes, according to one estimate from the World Bank.

The government has in the past managed the financial impact of disasters by securing public asset insurance and reinsurance and tapping other financing facilities such as catastrophe contingent credit line from the World Bank.

The Philippines is banking on an upgrade of its roads, railways, bridges and other infrastructure to hasten economic development and lift more people out of poverty. It expects to reach upper middle-income status by 2025.

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Philippines , typhoon , insurance


Next In Aseanplus News

Thaksin may return in July, ready to face judicial process: Paetongtarn
PM Lee Covid-free after ‘rebound’; catches up with Jokowi
What's the state of Philippine human rights under Marcos?
Cambodian farmers warned to prep for imminent droughts
Taiwanese star Will Liu's asking price for a 20-second video on social media is RM388,000
Cops raid online scam call centre in Kajang, 16 nabbed
Thailand cuts power to Chinese-backed casino complex in Myanmar
Vietnam businesses need to embrace green practices to export to EU
Temperatures not predicted to exceed 38�C even at height of upcoming El Nino, says Nik Nazmi
1MDB, subsidiaries get leave to continue lawsuit against Jho Low's associate

Others Also Read