By Michael F. Rellosa
THE fact that climate change and the deleterious effects that it can have on mankind is widely accepted and scientifically proven is a given. That the Philippines, owing to its location and geography, is one of, if not the most, vulnerable countries in the world is another widely accepted fact. Add to this the hydro-meteorological, seismic and volcanic events that have occurred in recent memory, and we have the elements of a perfect catastrophe.
In previous columns, I mentioned that it is long overdue for a whole-of-nation approach to addressing this pressing issue. I leave it to each sector to meet and craft ways to mitigate the expected adverse events, but belonging to the insurance industry allows me to dwell on the industry initiative on the table, the Philippine Insurance Catastrophe Facility (PCIF).
To be honest, this is probably the fourth iteration of the PCIF that we have tried to implement in the past decade or so, with the initial ones created by parties outside the Philippine insurance industry and forced down our collective throat. These were promptly and successfully resisted. The current one, however, is different. Consider the following: the premises mentioned above are accepted; there is a consensus that the industry must unite and act before it is too late; and this is one of the rare instances where the regulators (the Insurance Commission) and the industry have agreed and collaborated to set one up.
A technical working group (TWG), composed of members culled from all existing local insurers, has been set up to flesh out the details of the proposed facility. The TWG has worked steadily, meeting up to twice a month in the past year and a half together with the assistance of and valuable help from the world's leading brokers and reinsurers, who have committed time, resources and expertise to assist the TWG in fleshing out the details of the PCIF. The question of why involve these outside parties may be asked, but numerous and similar facilities have been set up in other areas of the globe where these same parties have been involved. It is best to learn from the experience, the mistakes and birth pains of other countries and adapt their best practices at the earliest opportunity; as the saying goes, "Why reinvent the wheel?"
Tomorrow, the TWG reconvenes to decide on an alternative that a member company has suggested. In all honesty, the alternative merits of looking into and possible development, in my humble opinion, can serve as the counterbalance to the PCIF as originally envisioned. As the humble Pinoy bangka (outrigger), there is stability and better coverage with both outriggers working in tandem.
We can split the TWG into two, with each subgroup working on each alternative, or create another one to work on the new alternative. This way, the gains made and the work done and painstakingly arrived at via consensus, are not wasted.
Let us not wait for another "Odette." The time to act is way past and the earlier that we get this off the ground and running, the better it will be for the industry and for the people it serves. With the two alternatives running side by side, we get to serve both the traditional buyers of insurance protection, as well as those who may not have the wherewithal to do so.
I hope and pray that the Philippine insurance industry can demonstrate its unity and capacity to see beyond its own borders and at the common good. After all, we only have one country and stabbing at the dark, one planet.