Car insurance with AOG rider up 35%

MANILA, Philippines - One year after the devastation caused by Typhoon Ondoy (international code name Ketsana), non-life insurance companies has reported a 35-percent increase in auto insurance with Acts of God (AOG) provision. They also noted a 12.5 percent increase in flood coverage for property mainly for residential and buildings.

However, insurers lamented that the increase was not driven by necessity and awareness.

Philippine insurers and Reinsurers Association (PIRA) chairman Michael Rellosa believes that the increase was caused mainly by the requirements of banks for AOG coverage as standard in all car loans as well as housing loans.

PIRA is the trade organization of non-life insurers selling such products as auto, property, fire, marine and personal accident insurance.

“It is sad that despite the Ondoy experience, Filipinos are still not insurance-conscious. They get insurance mainly because it is a requirement. We really need to educate our people on the importance of insurance,” Rellosa said. Typhoon Ondoy claimed nearly a hundred deaths, nearly 100,000 displaced families, and losses running in the hundreds of millions of pesos.

The estimated overall insured losses are said to reach over P15 billion. PIRA claims that over 95 percent of motor claims have been settled, and 65 percent of property claims have likewise been settled.

“The unsettled auto claims are imported cars that lacked spare parts and major businesses like factories, shopping malls and warehouses that take a long time to assess,” Rellosa said.

Adding to the difficulty, was the inability of insurers to deal with such a huge disaster in a single blow.

“There were not enough adjustment companies, not enough repair shops. It took months for the cars to be repaired,” he added.

PIRA expressed concern that if we keep doing the same things — like throwing garbage to canals and rivers and we don’t do anything to restore our forest cover — then a disaster like Ondoy will definitely happen again. If Filipinos refuse to seek protection like insurance cover, losses will only increase.

In the National Capital Region alone, an estimated 6,700 tons of garbage are generated daily. Ninety percent find its way to canals, rivers, Manila Bay, side streets, and backyards. Only 10 percent are recycled or processed.