By Diana Jean B. Evite
Gov't to set up earthquake insurer
A company could be set up solely to provide the earthquake insurance the
government seeks to make mandatory for households and small businesses,
the Asian Development Bank (ADB) has proposed.
The ADB presented to the Insurance Commission (IC) on Wednesday a
business plan to set up Earthquake Protection Insurance Corp. (EPIC) --
a "model company" that will lead the implementation of the proposed
compulsory earthquake insurance in the Philippines.
"There is already a virtual agreement from the industry to put up a
dedicated insurance company that will provide compulsory earthquake
insurance cover to small and medium enterprises (SME) and middle-class
residential units," Insurance Commissioner Emmanuel F. Dooc told reporters.
"But, this has to be formally taken up with us (IC), the local insurance
industry and the Department of Finance," he went on.
Discussions on the ADB proposal will start in January.
The proposed initial capital for EPIC -- which will run under a
public-private partnership -- is $400 million dollars, while its
proposed production target is at least 300,000 earthquake policies
within five years.
The model company is expected to attract domestic and foreign insurers
to invest in the earthquake insurance program in the country.
"The idea why we need to put up a model company in the form of EPIC is
we want to secure support of the insurance companies overseas," Mr. Dooc
said.
"If they see a company dedicated to earthquake risks adequately
capitalized and with investors which are reputable and also backed up by
adequate resources, then getting reinsurance support will not be a
problem," he explained.
Mr. Dooc noted that earthquake insurance is not popular among SMEs and
households because it is too expensive. Making it mandatory will bring
down its cost and expand its reach, thereby making it a more
commercially viable business for insurers.
"Traditional players or insurance providers will not just come in
because it will not be a viable commercial proposition to engage in that
particular business line, without the scale, without the appropriate
premium and without certain assurance that the market will support it,"
the IC chief explained.
The regulator has been pushing for a bill that will make earthquake
insurance coverage mandatory as the country lies in the Pacific Rim of
Fire -- an area in the Pacific Ocean where most of the world's
earthquakes and volcanic eruptions occur.
Mr. Dooc said some legislators have already expressed support for the
proposed bill.
"I don't think we'll have difficulty lining up support of legislators in
light of the recent calamities that hit us," he added.
On Nov. 8, super-typhoon Yolanda (international name: Haiyan) struck
central Philippines, killing almost 6,000 people and causing widespread
damage in infrastructure and agriculture.
Prior to that, a 7.2-magnitude earthquake shook the provinces of Bohol
and Cebu, leaving 200 dead and destroying billions worth of agriculture
and infrastructure, including iconic heritage sites.
---
This email is free from viruses and malware because avast! Antivirus protection is active.
http://www.avast.com
