The Asian Development Bank (AfDB) launched its first pilot disaster insurance program in the Philippines and also approved a $ 500 million loan to the country in the event of a natural disaster or public health emergency.
The conditional loan facility is similar to the World Bank’s Deferred Disaster Drawdown (CAT-DDO) options which provide a secure source of funding when a disaster or emergency is declared.
This AfDB disaster financing instrument covers both natural disasters and health emergencies, and therefore could trigger disasters such as typhoons or earthquakes and also a repeat of the pandemic, it is assumed. we.
“The Philippines has been affected by several major disasters in recent years, including Typhoon Haiyan (Yolanda) in 2013, the eruption of Taal volcano in January 2020 and the current coronavirus disease (COVID-19) pandemic,” said AfDB Vice President Ahmed explained. Mr. Saeed.
“This new contingent funding instrument for disasters will help the government manage the fiscal risks posed by these shocks and reduce the economic and social impacts on people’s livelihoods and the country’s economy.
“The Disaster Resilience Improvement Program will support government policy reforms aimed at ensuring that the government can respond quickly to the needs of vulnerable segments of the population following disasters. It will also strengthen the Philippines’ overall response to disasters and pandemics, ”added Benita Ainabe, AfDB Financial Sector Specialist for South East Asia.
This program also supports the launch of the AfDB’s first pilot catastrophe insurance program, which targets several cities in the Philippines, with the aim of strengthening their fiscal resilience in the face of disasters and severe weather events.
The goal is to provide a predictable and timely source of funding for the post-disaster response, so it is likely to be a parametric insurance product designed to pay when local government sources need it.
Of course, the Philippines benefits from a number of sources of disaster insurance and reinsurance capital, including its first catastrophe bond which was issued with World Bank assistance last year, the BIRD CAR 123-124 transaction.
The government of the Philippines is also prepare a new offer for its insurance of state-owned assets and infrastructure, we understand.
The country is also studying a new disaster risk pool for the private sector, and already has parametric insurance cover against natural disasters which has been completed at the end of 2018 for an amount of 390 million dollars and benefits from the support of reinsurance and insurance-related securities (ILS) players.