Insurance firm under PPP framework eyed

The government, through a loan assistance of about P3 billion from the Asian Development Bank, intends to put up an insurance company that will likely be under the Public Private Partnership program framework. AFP FILE PHOTO

MANILA, Philippines—The government, through a loan assistance of about P3 billion from the Asian Development Bank, intends to put up an insurance company that will likely be under the Public Private Partnership (PPP) program framework.

The insurance firm, to be named Earthquake Protection Insurance Corp. or Epic, will likely have equities from both the government and the private sector.

The government will raise part of the capital requirement through a loan from the ADB, which has expressed willingness to lend an initial amount of $70 million (about P3 billion), and will offer equity shares to the private sector.

“The insurance company is meant to provide insurance to SMEs (small and medium enterprises) and to middle-income homeowners,” Insurance Commissioner Emmanuel Dooc told reporters.

The insurance firm will likely focus initially on selling insurance against earthquake, but may also offer later insurance against other forms of disasters, such as typhoon and flooding.

The establishment of the insurance company, however, will depend on the passage of a bill that seeks to require owners of SMEs and homeowners to secure insurance for their properties, which will provide the planned insurance firm an assured market.

The bill, which has been filed in Congress, is being pushed by the Insurance Commission.

Dooc said the most recent earthquake and the supertyphoon that hit the country stressed the need for Filipinos to insure their properties.

This type of insurance is deemed important especially for low middle-income earners as calamities tend to push them below the poverty line.

According to the National Economic and Development Authority (Neda), poverty incidence in the country may rise this year due to the adverse effects of Supertyphoon “Yolanda.”

Citing an ADB study, the Neda said the country’s poverty rate, which stood at 25.2 percent last year, could rise by 1.5 percentage points this year.