By Michael F. Rellosa
Typhoon Carina (international name: Gaemi) did not make landfall in the Philippines but intensified the southwest monsoon, drenching our country with rainfall that has, according to reports, surpassed that of Ondoy. Luzon, the National Capital Region and neighboring regions suffered the brunt and strength of the deluge. Scenes on TV and social media and the appeals of people to be rescued were reminiscent of Ondoy that rampaged through our nation 15 years ago.
Did we learn our lessons from Ondoy and the other powerful typhoons that followed, and are we doing enough to prepare? That is not for me to answer, and I leave it to you, dear reader, to ferret out the truth. To my mind though, there have been notable improvements. We have more specific warning signals from wind speed to rainfall, storm surge warnings and river water levels. Communication is much better, and response is more coordinated. People have also learned to be more compliant and are ready to follow the authorities' instructions. Supplies are pre-positioned, and there is a chain of command that is in charge. We are handling things better and are more proactive.
However, in the risk managers' tool kit, which I have mentioned in previous columns, have we exhausted all measures or, more to the point, have we made the various risk management tools readily available to our compatriots? It will take several columns to dissect the reasons for the seeming failure to recognize the importance and utility of one of the tools in the toolbox, namely risk transfer or insurance. There is no question that it is currently available, but not many of our compatriots have access to or are even aware of it. Restricted access alone has a multitude of reasons ranging from cost to the insurers' risk appetite and much more in between. There are likewise as many solutions to each of these reasons, but they currently remain on paper as well-meaning plans.
One of the solutions put forth, a brainchild of the entire industry and supported then as now by the Insurance Commission, is the Philippine Catastrophe Insurance Facility, or PCIF. The PCIF is yet to be launched as it suffered setbacks from implementing the technical rates acceptable to the global reinsurance market and local issues such as the business decision taken by some local insurers to delay joining the facility. On top of that, the issue of affordability of premiums, especially for the underserved portion of the population who are the ones most in need of such coverage, remains a challenge.
In the desire of the industry to be able to respond to such a pressing need, a second workstream has morphed from the original PCIF — this time, it is a hybrid parametric and indemnity-based product in bite-sized pieces (read microinsurance), thus making it accessible to the section of the populace that needs it most. Being part parametric, it answers the quick and simple claims payout needed post-catastrophe to help tide the insured through the recovery period. Once approved by the regulators, this is ready to be rolled out by a group of PIRA members who have signified their intention to market such a product.
The PCIF itself and the hybrid NatCat product will not be enough, though. These must be launched together with an awareness campaign for all stakeholders. Another must is the continuing support of not only the Insurance Commission but also the other agencies of government whose mandate is to help uplift and preserve the lives, livelihood and property of the populace. The collaboration of government and the private sector is key in times of catastrophes.
Source: manilatimes.net
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