HIGH LEVEL FORUM ON STRENGTHENING
DISASTER RISK INSURANCE IN THE PHILIPPINES
Multi-Purpose Room, Philippine Senate
21 January 2014

STATEMENT OF SENATE PRESIDENT FRANKLIN M. DRILON

Senator Loren Legarda, friends, ladies and gentlemen, a very pleasant morning.

First of all, let me extend my congratulations to my colleague Senator Loren Legarda for spearheading this high-level forum on strengthening the disaster risk insurance in the Philippines.

This is indeed, a very timely forum as barely two months ago, one of the strongest typhoons ever recorded ripped through the Visayas region. The ferocity of typhoon Yolanda left a trail of devastation of epic proportions to our country. This horrific incident highlighted our preparedness - or perhaps, the lack of it - in times of disaster. But how could one adequately prepare for natural disasters as fierce as typhoon Yolanda, Hurricane Katrina or the tsunami that hit Japan almost three years ago?

Extreme weather conditions, heavy precipitation and drought all over the world are being attributed to climate change. In light of these growing challenges posed by climate change, disaster risk financing and insurance have thus gained currency. During the ASEAN Finance Ministers' Meeting in Bali in April 2011, ASEAN Finance Ministers underscored the importance of regional cooperation on disaster risk financing and insurance. Since ASEAN member states are perennially exposed to adverse natural events, they have agreed that a regional disaster risk financing and insurance strategy is crucial.

Traditionally, insurance has been used to manage risks. As a risk management tool, insurance would protect individuals and communities from financial suffering in the aftermath of natural disasters. But we can all agree on the fact that insurance is not a silver bullet for risk management and risk reduction. It is one of the mechanisms to manage or transfer risk, but we need to ask the question: In our investing environment, is it the best course of action in terms of cost effectiveness and affordability? It is in forums such as this where we must and can examine such propositions. Disaster risk insurance is something that is new to many of us. Therefore, we must carefully examine this from the point of view of policy makers.

For example, there are existing regulations on risk insurance of all government buildings, which are supposed to be insured. All agricultural losses are supposed to be insured through the Philippine Crop Insurance Corporation, a subsidiary of Landbank. Then there are already three laws - which were cited by Ms. Mary Ann Lucille earlier - which we have drafted precisely to respond to the risk of climate change. All of these things must be examined in their entire context, very much so this new concept of disaster risk insurance.

On the part of the Philippine government, we at Congress in the meantime have allocated substantial funds in the national budget which we use to respond to the needs of victims of calamities that hit us. The 2014 National Budget provides funds for the survivors of disasters, particularly the victims of typhoons Santi, Labuyo and Yolanda, 7.2 magnitude earthquake in the Visayas region, and the siege in Zamboanga City. The General Appropriations Act of 2014 also included authorizations worth P100 billion for the completion of various relief and rehabilitation programs.

Right now we are like self-insurers. Whenever there is a disaster, we have to dig in the national coffers so we can respond to the damages in any part of the country. So the policy issue now is: Should we now examine the disaster risk insurance concept and make a paradigm shift, which can be activated within six months? I am not certain if we can arrive at such a major policy decision within such a short period of time.

Those are my humble thoughts on this forum. As Senator Legarda said, it is indeed a good start that we have opened the debate on this issue. We may disagree now on some points, but with the nation's interest in mind, we can surely come up with a system that can adequately respond to what we face today in terms of risk reduction to our country.

Thank you all very much.