Strengthening disaster resilience in the Philippines
It is estimated that each year an average of 20 typhoons make landfall in the Philippines. The strongest of these storms create significant damage and can cause many fatalities. In 2013, Super Typhoon Yolanda (also known as Typhoon Haiyan elsewhere), which was one of the strongest storms ever recorded at landfall, claimed approximately 6 000 lives and damaged a million homes in nine regions.
In view of the latent typhoon and other natural disaster risks, the Philippine government had already started to change its strategic approach a couple of years earlier in the wake of the 2009 typhoon season, which had caused losses of USD 4.4 billion (equivalent to 2.7% of GDP). It introduced new legislation marking a move from disaster response to disaster risk reduction and preparedness, and started to implement a three-tiered Disaster Risk Financing and Insurance strategy.
The three tiers refer to the national, subnational and household level. At the national level, the government negotiated a contingent credit line with the World Bank to provide immediate liquidity in the aftermath of a natural disaster. In 2017, protection was added at the subnational level for the most exposed provinces. Supported by the World Bank, Swiss Re and other partners, the government bought a parametric earthquake and typhoon cover offering up to USD 200 million of protection to 25 provinces along the eastern edge of the Philippine archipelago. The risk has been fully ceded to local and national re/insurers, including Swiss Re, who will quickly provide provincial governments with liquidity in the event of a disaster.