P2B plan to insure public assets pushed to 2021

MANILA, Philippines—The P2-billion national indemnity insurance program aimed at insuring and protecting public assets in disaster-prone areas will be rebid next year, National Treasurer Rosalia V. de Leon said on Wednesday (Dec. 9).

The state-run pension fund Government Service Insurance System (GSIS) was already “doing some informal sounding to see pricing since the spate of typhoons and COVID-19 pushed premiums,” De Leon said in a text message.

However, De Leon said the program can no longer be rolled out this year since it will entail procurement, which would take some time.

Last May, the interagency Government Procurement Policy Board (GPPB) amended the bidding documents for procurement of international brokers and reinsurers for the national indemnity insurance program.

A key amendment would make GSIS require from prospective bidders only a statement of sovereign or government clients during the past 10 years, which was simpler than last year’s requirement for bidders to submit a statement of all ongoing and completed government and private contracts to include contracts awarded but not yet started.

It will also require audited financial statements for calendar years 2018, 2019, 2018-2019, or 2019-2020 in accordance with international financial reporting standards, instead of the earlier requirement to have bidders’ audited financial statements received or stamped by the Bureau of Internal Revenue (BIR).

The eased rules also did away with five technical proposal forms and four financial proposal forms in the public bidding documents which included a revised format of curriculum vitae for the proposed professional staff to reflect that it need not be notarized. It also established an errors and omissions policy as an allowable form of performance security, equivalent to 5 percent of the awarded contract price.

In December 2019, the Inquirer reported the failed bidding for the national indemnity insurance program, even as the GSIS had allowed reinsurers to submit bids until Dec. 11, 2019 from an original deadline of Dec. 4.

The reinsurance contract would have covered the period Dec. 19, 2019 until Dec. 19 this year.

The contract would have insured against fire, lightning, and natural catastrophes:

Quakes, floods, storm surges, typhoons, and volcanic eruptions
Bridges and roads of the Department of Public Works and Highways (DPWH) in 25 provinces
Schools of the Department of Education (DepEd) in Metro Manila and 32 provinces.

In 2019, the Bureau of the Treasury and the GSIS signed a memorandum of understanding (MOU) for the indemnity insurance program, which will insure government assets in 25 provinces in the eastern seaboard for P1 trillion—the total insurance covering strategically important assets in coastal areas facing the Pacific Ocean.

De Leon earlier said the Treasury had allocated P2 billion for indemnity insurance premium entailing adjustments based on losses and transferring them to reinsurers, which could take more time to activate unlike quick-disbursing parametric coverage where payouts were immediately released after hitting loss triggers.

World Bank estimates had shown that typhoons inflicted P133.2 billion in economic losses per year, while earthquakes had caused P43.5 billion in damage yearly.

Benedikt Lukas Signer, senior financial sector specialist at the World Bank’s disaster risk finance and insurance program, told a forum on Wednesday that 60 percent of the Philippines’ total area and nearly 74 percent of its population were exposed to multiple natural hazards.

Finance Secretary Carlos G. Dominguez III told the World Bank Philippines forum that the Department of Finance (DOF) will not only “strengthen the integration of disaster risk mitigation in our fiscal strategy” but also “explore innovative financing structures to proactively protect the fiscal health of our government against adversities” like climate change.

Edited by TSB