The Philippines has long been exposed to climate hazards, from typhoons to floods and earthquakes, due to its geographical location. While the insurance market is stronger than a decade ago, extreme events still test claims operations and the resilience of weaker carriers. To address this, Southeast Asia is developing innovative risk-financing solutions that the Philippines can adopt or scale, says the Philippine Insurers and Reinsurers Association (PIRA) Executive Director, Michael Rellosa.
“Parametric insurance is a game-changer,” Mr Rellosa said, offering rapid payouts triggered by wind speed, rainfall, or river levels. He noted that the Philippines already leads in subnational parametric programmes, enabling provinces, cities, and critical infrastructure to access emergency funds within days.
Mr Rellosa also highlighted regional risk pooling via SEADRIF (Southeast Asia Disaster Risk Insurance Facility) as a key innovation. “SEADRIF is becoming the region’s most concrete platform for pooled and structured risk transfer, as well as technical assistance,” he said. “It is recognised in ASEAN+3 finance cooperation, with ambitions to expand sovereign parametric products, public asset protection, and even agricultural solutions. The facility has proven fast payouts, for instance providing Laos with funds within days after flood thresholds were exceeded.”
He added that catastrophe bonds provide multi-year capital for extreme events, and the Philippines has issued the region’s first sovereign cat bond. Public–private partnerships for public asset insurance help protect the country’s extensive infrastructure, speeding restoration, reducing fiscal shocks, and promoting resilient design. Nature-based parametric covers safeguard reefs and mangroves, while disaster-contingent credit and climate-resilient debt clauses provide immediate post-disaster liquidity.
According to Mr Rellosa, a layered approach—combining parametric triggers, SEADRIF pooling, PPP insurance, catastrophe bonds, and contingent credit—offers the most practical path for the Philippines to manage climate-driven catastrophes while aligning with Southeast Asia’s best practices.