Typhoon Index Insurance - The Philippines
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Project Description:
The International Finance Corporation (IFC), supported by the Global Index Insurance Facility (GIIF) and the Canadian government, has been working with CPMI (CARD Pioneer Microinsurance Inc.) and CARD MRI (the Centerfor Agriculture and Rural Development, Mutually Reinforcing Institutions) to create an index-based portfolio insurance product to insure the loan portfolios of lending institutions such as microfinance institutions (MFIs). They have also been working to provide advisory services for an indemnity-based crop insurance product to insure crop losses suffered by CARD agri-borrowers, and to address the typhoon-related risks faced by both lenders and farmers.
Background
The Philippines is highly dependent on the agribusiness sector, which provides employment for over one-third of its 40 million workforce. Despite its significance, one of the factors impeding productivity is weak investment in the sector due to risks from natural calamities such as typhoon. The Philippines is ranked the 3rd most disaster prone country in the world, experiencing an average of 20 typhoons a year – with Haiyan (local name Yolanda) being the most powerful typhoon in the world’s recent history.
Clients
20,000 - 30,000 farmers (estimated)
Partners
Center for Agriculture and Rural Development (CARD), and CARD Pioneer Microinsurance Inc. (CPMI - Joint Venture Insurance Company, between CARD and Pioneer Insurance)
Products
Development and deployment of insurance (both index and indemnity) products to address typhoon-related risks faced by both lenders and farmers
Insured Perils
Mainly typhoons
Insured Assets
Indemnity Product: Rice and corn crops of CARD farmer borrowers
Index Product: Portfolios of banks and MFIs
Results and Impacts
It is expected that these products will be launched in 2016, with the goal of insuring 200,000 farmers by project end. The indemnity-based crop insurance product was launched in October 2016, and will target 40,000 farmers in the first year. The index product is set for launch in early 2017. CARD is the largest MFI in the country, with four million clients.
Next Steps
For the indemnity-based product, the challenge will be to process claims efficiently after a typhoon. The project is working with the clients to incorporate technology and possibly index solutions to ease this constraint. For the portfolio index product, the challenge will be to ensure a product that triggers when relevant, taking into account both wind speed and rainfall, with payouts that alleviate losses to bank portfolios.
Contact
Utako Saoshiro | usaoshiro@ifc.org
