The PH insurance industry as an “awakened” entity

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IN common usage, to be “awake” means to be aware of what really matters or has real value. Other meanings include “knowledgeable”, “up to date”, “injustice alert” and “aware of the common good”. In other words, it means being alert, sensitive and open to social, ecological and economic issues that would contribute to the common good.

To the reader, it may seem strange that the Philippine insurance industry is seen as a “waking” entity, but yes it is, as the industry finds itself increasingly involved in many initiatives. which are in the framework of being “green”. “Ecologically sensitive” and “socially conscious” so that its ultimate objectives now go beyond the traditional motive of any business entity, which is profit, while being, likewise, for the “common good”.

To begin with, aware of the gap in coverage in the area of ​​catastrophic risks of earthquakes, typhoons and floods, and given that the Philippines faces these same risks in abundance, with which they routinely face , the industry is currently in the process of setting up a system for pooling these risks. In doing so, the desired effects would be sustainable pricing, a homogeneous portfolio (read, less volatile) for each of the participants, more efficient management of stop loss protection and therefore less expensive, which in turn leads to more high capacity of such risks and for the public ensuring better availability of such Cat covers. The Insurers and Reinsurers Association of the Philippines (PIRA) and its member companies are working with the Insurance Commission and the World Bank to make this a reality, hopefully by the second quarter of next year.

The industry, through PIRA, is also working with Earth Security – a UK-based non-governmental organization – the Insurance Commission, the Asian Institute of Management, the Philippine Business for Sustainable Development and the Climate Change Commission, with the financial support of the International Climate Initiative of the German government to create platforms and partnerships with the private sector, to support nature-based climate solutions for adaptation.

A third initiative in which the industry, through PIRA, is involved, is the creation and scaling of a new parametric hedge using the same catastrophic risks noted above as triggers for a payment. This is made available to micro, small and medium enterprises, a sector largely underserved by industry. The introduction of such a product goes hand in hand with a popular education campaign, which will include topics on risk management and financial literacy, designed to build the capacity of the insurer public. PIRA works closely with GIZ, the aid arm of the German government and Celsius Pro, world pioneers in the design of parametric products.

With the help of the Asian Development Bank, PIRA works to engage its members in purchasing agricultural insurance products, the provision of which for decades has been the sole territory of the Philippine Crop Insurance Corp. (PCIC). To get its feet in the water and refine its expertise in writing new coverage, the private sector was allowed to share initially as a reinsurer for the risks that the PCIC underwrites and holds for its own books.

In response to the Sendai Framework for Risk Reduction, a major agreement by UN member states to take concrete action to protect development gains from disaster risk, the global private sector has come together in ARISE to be able to harness the assets, resources and capacities of the sector to help achieve agreed milestones in Sendai. The insurance industry, through PIRA, has been accepted as a member of ARISE Philippines. Recently. PIRA has taken on the role of leader of the insurance sector to accelerate local initiatives in support of the Sendai framework.

It doesn’t stop there. PIRA is one of two local signatories (the other being the National Reinsurance Corp.) of the Global Compact for the Protection of World Heritage Sites led by the United Nations Educational, Scientific and Cultural Organization and the World Wide Fund for Nature. Signatories are required to protect World Heritage sites by taking action by cutting or funding projects that damage these listed sites.

This is just the start, as PIRA is opening up to partner with any group or institution that shares its values ​​and aspirations to ensure the security of the world we live in and its people.


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