International Finance Corp. (IFC), the private sector funding arm of the World Bank, is working with partners to design new insurance products that aim to protect Filipino farmers against costly typhoon-related losses. AP/BULLIT MARQUEZ
MANILA, Philippines—International Finance Corp. (IFC), the private sector funding arm of the World Bank, is working with partners to design new insurance products that aim to protect Filipino farmers against costly typhoon-related losses.
Filipino farmers have lost an estimated $2.5 billion to inclement weather since 2009, IFC said in a statement released on Wednesday.
The 2012 World Disaster Report ranked the Philippines as the third-most disaster-prone country in the world, with an average of 20 typhoons per year.
IFC said it had teamed up with the Center for Agriculture and Rural Development Insurance Agency (CARD) and Pioneer Insurance and Surety Corp. to design the new product.
The project is seen enabling CARD Insurance and Pioneer Insurance to offer indemnity insurance to thousands of farmers and rural entrepreneurs as an affordable means to protect their assets and livelihoods.
“Farm insurance has not taken off in the Philippines because premium costs are high and payment delays discourage potential clients,” said IFC resident representative Jesse Ang. “The lack of insurance makes farmers vulnerable to losses from calamities. We hope that our latest initiative will help address this problem.”
Pioneer Life president Lorenzo Chan Jr. said this was a step to help farmers manage the risks they were facing.
The indemnity insurance will be complemented by index-based insurance, which pays benefits by using a pre-determined index that takes into account factors such as wind speed and rainfall levels to estimate losses brought about by bad weather and catastrophes. This approach eliminates the need for traditional insurance claim assessments, enabling farmers to get their compensations more quickly.
With these insurance products offered by CARD Insurance to its members, the country’s biggest microfinance institution aims to expand its agricultural lending while helping farmers protect their assets.
“This new partnership will help our farmer-clients, who make up nearly half of our 1.8 million clients, mitigate risks,” said CARD chair Jaime Aristotle Alip.
The Global Index Insurance Facility, a multi-donor trust fund managed by IFC, will provide funding and technical advice for the project. The facility is funded by the European Union, Japan and the Netherlands and their implementing partners have insured more than 228,000 farmers and micro-entrepreneurs in developing countries.
Agribusiness contributes about 11 percent to the domestic economy and provides more than a third of the total number of jobs in the country.
IFC said insufficient risk management was a major disincentive to agricultural investment, further hindering economic growth.