BACOLOD CITY—The government is expected to make mandatory insurance coverage to help households as well as businesses immediately recover from property damage when a natural disaster strikes.
In a briefing during the Asia-Pacific Economic Cooperation (Apec) Disaster Risk Finance-Roadmap for Resilient Economies meeting on Wednesday, Insurance Commissioner Emmanuel F. Dooc disclosed that an executive order had been drafted for President Aquino’s approval, under which certain types of houses and small and medium enterprises (SMEs) would be provided with mandatory cover by non-life insurance firms together with the World Bank and International Finance Corp.
Under this initiative, owners of residential units as well as SMEs will be protected against damage due to earthquake, fire, typhoons and flooding, Dooc disclosed.
This proposal was spearheaded by the industry group Philippine Insurers and Reinsurers Association, Dooc disclosed.
The Department of Finance has ordered the Insurance Commission as well as the Bureau of the Treasury to review the viability of the measure before it can be approved by President Aquino within this year, according to Dooc.
Once given the go-ahead by the President, all non-life companies will be enjoined to put up a disaster insurance pool, after which they would offer “affordable” premiums by placing a cap on the basic cover.
To make the insurance fund viable, Dooc said the institution would propose to bundle the mandatory insurance coverage with other payments, such as contributions to the Pag-IBIG Fund or real estate tax payments.
“If we make make it compulsory, what happens is we get the critical mass that will lower the cost of insurance,” he noted. Ben O. de Vera