The draft executive order that will establish a mandatory catastrophe pool for micro-, small- and medium-sized enterprises (MSMEs) and households throughout the country has already been endorsed for approval by President Aquino.
Insurance Commissioner Emmanuel F. Dooc said the draft executive order proposes to establish a mandatory property-insurance coverage that will include all households and MSMEs so that the risk of property destruction due to disasters will be spread over as many policyholders as possible.
The so-called cat-pool was meant to insure all private dwellings and assets of MSMEs have a proper shield against ruin or destruction brought about by natural disasters.
“We need to make it mandatory so that we will hit the critical numbers, because, if not, then the policies will be very expensive and out of reach of the poorer Filipinos who are intended to be benefited by the insurance coverage,” Dooc said in a news conference.
The so-called cat-pool was proposed to be administered by a pool of insurers who will underwrite the policies according to their corresponding exposure to the risks.
Earlier, Philippine Insurers and Reinsurers Association Chairman Michael Rellosa explained that members of the cat-pool, who may voluntarily join, will underwrite a certain portion of the policies depending on their capital and appetite for risk.
The proposal to establish the cat-pool was also supported by the World Bank and the International Finance Corp.
Dooc said the proposed minimum amount of claims for households was pegged at P1 million, but quickly added certain items may be deducted to lower the amount of the insurable interest and correspondingly lower the premium required to be paid.
The maximum amount of premium to be paid for the mandatory insurance coverage has not been set at this point since such would require further study to balance the intent behind the mandatory insurance to make the premiums affordable to the poor while protecting all from property and livelihood loss due to natural calamities.