Philippines, Germany to develop climate risk insurance products for poor households, small businesses

Makati City, Philippines, 12-13 February 2019 — The German government is partnering with the Philippine government and private companies to develop viable climate change insurance products for the poorest of the poor and for micro, small, and medium enterprises (MSMEs).

This was announced by Dr. Antonis Malagardis, program director of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, which will implement the project on behalf of the German Federal Ministry for Economic Cooperation and Development.

The project will also be implemented in Vietnam and Indonesia.

The three countries were cited in the World Risk Report 2017 as 3rd, 18th, and 33rd of the 171 countries most at risk from the adverse impacts of climate change, which include extreme weather events.

According to Philippine Insurance Commissioner Atty. Dennis B. Funa, the country experiences a total of USD3.5 billion in damages yearly due to typhoons and earthquakes.

In 2009, however, MSMEs in the country lost around USD4.4 billion from floods caused by typhoons Ondoy and Pepeng, reported the Philippine Institute of Development Studies.

The amount accounted for 2.7% of the country’s GDP for that year.

A World Bank report says the adverse impacts of natural disasters are among the constraints to the Philippines’ achievement of faster poverty reduction.

President Rodrigo Duterte wants to bring down the country’s poverty incidence from 21.6% in 2015 to 14% in 2022. 

The World Bank report recommended management of disaster risks and protection of the vulnerable as one of six policy directions by which the current administration can hasten poverty reduction.

Indeed, Philippine National Anti-Poverty Commission Secretary Noel Felongco (in photo) said climate change adaptation is a priority of the agency.

GIZ will work with several government agencies and the business sector to develop policy and regulatory reforms, viable business models, the market, and digital tools for climate risk insurance in the country. Among the government agencies that GIZ will work with are the Department of Finance, Insurance Commission, Climate Change Commission, National Disaster Risk Reduction and Management Council, Department of Science and Technology, and National Anti-Poverty Commission; and for industry, the Philippine Insurers and Reinsurers Association.