File photo by Francis Malasig / EPA
BACOLOD CITY, Philippines – The 21 member-economies of the Asia-Pacific Economic Cooperation (APEC) is pushing for microinsurance to mitigate the impact of natural disasters.
The two-day disaster risk finance meeting, which started Wednesday, April 29, discussed initiatives on disaster risk management.
Arup Chatterjee, principal financial sector specialist of the Asian Development Bank (ADB), said that the global damage brought by calamities has already reached $300 billion.
He urged global leaders to bring down the figure by investing in microinsurance, adding that it is a wise investment to strengthen resilience among vulnerable communities.
Chatterjee added that insurers play a critical role in providing financial protection. He said that 9 out of 10 fatalities come from low-middle income countries, "a disaster in one region can cause economic turbulence to another."
He also said that "true resilience comes from the strong bond of the countries and translate crisis into opportunities."
Solution and hope
Philippine Insurance Commissioner Emmanuel Dooc stressed that developing countries are vulnerable to the onslaught of natural disasters, thus the challenge lies in how to make communities and businesses resilient and sustainable in the face of such calamities.
"We’re faced with a formidable task to make our communities resilient when facing calamities," Dooc said.
He pointed out that governments should invest in disaster mitigation. "We cannot wait for disasters to happen before we take action. Risks are costlier and deadlier after a disaster happens."
Without preparation, funds that would have gone to investments in growth are instead channeled to repair and rehabilitation, disrupting economic development plans, Dooc stressed.
He said microinsurance is a “principal tool” of small and emerging countries that are vulnerable to natural disasters. "Based on our national experience, microinsurance offered solution and hope.
"While Super Typhoon Yolanda wiped out communities and caused so much loss of life, thousands of households benefited from microinsurance coverage. P10,000 ($225.66) was the average benefit from microinsurance policies, while it only cost them a few hundred pesos paying the premiums. Total benefits of almost half a billion pesos were paid to low-income beneficiaries," Dooc said.
H added that microinsurance in the country is now well recognized, and the landscape of microinsurance in the Philippines ranked number one among over 30 countries surveyed according to a study done in Munich, Germany.
“Microinsurance will continue to be a major thrust of the insurance program," Dooc said.
Microinsurance also gives people a flexible economic opportunity, Dooc said.
“The poor should not remain poor forever; everyone should benefit and no one should be left behind,” he said.
Julius Parrenas, who is APEC Business Advisory Council delegate to APEC-Finance Ministers Process and senior adviser of Nomura Securities Company, said that insurance tends to be the under-appreciated part of the financial sector because many people only realize its importance after they go through a disaster.
Parrenas said that empowering small and microenterprises and deepening supply chains to reach the agricultural hinterlands and peripheries of APEC economies require measures to promote resilience against unexpected events and disasters.
"Microinsurance and disaster risk finance are tools that will be as important for the region's sustained economic growth as they are for the personal lives of people living in exposed and vulnerable communities," he stressed.
Michael McCord, Microinsurance Network chairman, explained that microinsurance is designed for low-income people because they are the ones who suffer the most when disasters strike.
He said that there are 66 million people in the world – 27.9 million in the Philippines – were covered by microinsurance.
McCord added that the Philippines is a tremendous case study for microinsurance, adding that the country is considered as a model for the initiative. – Rappler.com
$1 = P44.32