The Philippine government is proposing to multilateral agencies for the establishment of a risk pooling facility that will insure nations from natural disasters, the Department of Finance (DoF) said yesterday.
Finance Secretary Cesar V. Purisima told the Senate during a budget hearing that the government has already submitted its proposal to the World Bank in 2010 for the establishment of a "catastrophe risk insurance."
"We've proposed to the World Bank that all countries be asked to be part of a mandatory insurance pool and the insurance premium to be based on each country's share of the carbon footprint," Purisma said.
The finance chief explained that the facility will be designed to limit the financial impact of catastrophes to member nations by quickly providing short term liquidity when a policy is triggered.
"We are continuing to explore other financial instruments to help us deal with financial risks brought by disasters," Purisma told Senators when asked about the finance department's preparedness in time of a natural disaster.
Purisima said that governments, particularly those most venerable nations like the Philippines, will be protected from catastrophes once this proposal is adopted by the World Bank or the Asian Development Bank (ADB).
"It should be the initiative of many countries, the concept of risk sharing is among the countries and I hope I will get traction," Purisima said.
Though the Philippines has yet to get commitment from other nations, Purisima said that they have already talked to the Japanese government about the risk insurance.
Purisima said he is "hopeful" that other nations will, likewise, support the plan.
The Philippines is looking at the Caribbean Catastrophe Risk Insurance Facility (CCRIF) as a model for its proposal.
CCRIF is the world’s first and, to date, only regional fund utilizing parametric insurance, giving Caribbean governments the unique opportunity to purchase earthquake and hurricane catastrophe coverage with lowest-possible pricing.
CCRIF represents a paradigm shift in the way governments treat risk, with Caribbean governments leading the way in pre-disaster planning.
CCRIF was developed through funding from the Japanese government, and was capitalized through contributions to a multi-donor Trust Fund by the Government of Canada, the European Union, the World Bank, the governments of the UK and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments.
Currently, there 16 governmen members of CCRIF.
These include, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and the Turks and Caicos Islands.
In 2007, CCRIF paid out almost $1 million to the Dominican and St Lucian governments after the 29 November earthquake in the eastern Caribbean; in 2008, CCRIF paid out $6.3 million to the Turks and Caicos Islands after Hurricane Ike made a direct hit on Grand Turk; and in 2010, CCRIF made a payment of $7.75 million to the Government of Haiti after the 12 January earthquake.
