Philippines seeks US$20bn cover for P&C exposure

December 9 2019 by Yvonne Lau

The government of the Philippines, in the latest bid to protect state assets against natural catastrophes, have signed a memorandum of understanding (MoU) with its own Government Service Insurance System (GSIS) in a US$19.6 billion reinsurance protection scheme.

The scheme, called the National Indemnity Insurance Programme, seeks coverage for catastrophe exposures and other property risks. GSIS has put out to tender the reinsurance of the programme, and is accepting market bids.

Insured state assets include infrastructure such as roads, bridges and schools across 25 provinces in the country’s eastern seaboard. Protection will be provided against damages from natural catastrophes including typhoons, earthquakes, floods; fire, lightning and more – much needed in a country highly vulnerable to weather-related disasters.

The structure of the program is an indemnity arrangement.

Last month, the Philippines government issued two tranches of catastrophe-linked (cat) bonds – ensuring US$225 million of coverage against natural catastrophe losses. It was the first-ever listing of cat bonds on the Singapore Stock Exchange (SGX).

Expect to see more from the Philippines in weather-related coverage and risk transfer – both public and private sectors have recognised the need for financial resilience and protection. In the last eight years, natural catastrophes have cost the nation US$7 billion.

The country was lashed by Typhoon Kammuri (Tisoy) last week; which saw a death toll of three, hundreds of thousands evacuated and infrastructure damage.

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