Compulsory quake insurance for buildings, businesses sought

MANILA, Philippines - The umbrella group of non-life insurers wants to make earthquake insurance compulsory for residential buildings and small to medium businesses, saying this will help hasten the recovery of affected sectors.

The Philippine Insurers and Reinsurers Association (PIRA) said many would be “virtually defenseless” against the economic impact of a magnitude 7.2 quake since less than one percent of the 14 million people in the metropolis are insured.

The group said millions of Filipinos would be devastated, with no one but the government and foreign aid to depend on, if the “Big One” happens.

“We have heard so much about the Big One already but there is not much discussion on how Filipinos can protect themselves from this earthquake’s economic effects. Insurance is a very effective tool in recovering from such disaster as evidenced by experiences in countries like Japan,” PIRA Chairman Michael Rellosa said in a statement.

“Without insurance to tide them over, we Filipinos would have a hard time getting back on our feet when the Big One happens,” he added.

Antonio Cabusao, member of the PIRA public relations committee, said the proposal on compulsory earthquake insurance is now on the table of Finance Secretary Cesar Purisima.

“Hopefully, President Aquino will approve this and come up with an executive order,” Cabusao told reporters Tuesday on the sidelines of a seminar organized by The Insurance School of Japan in Makati.

Congress needs to pass a law to institutionalize the policy. When asked if PIRA is optimistic that such law will be passed considering that the 2016 election is nearing, Cabusao said: “We are always keeping our fingers crossed.”

Rellosa said the proposal has been endorsed to the Finance department about three months ago. 

“We’re not giving up on it. We’re doing this because we were asked by the Insurance Commission. This is an initiative of the government and this is our way of cooperating,” he said.

Once implemented, the insurance will be one of the requirements for those seeking business permits and will be paid along with the annual realty tax.

“We hope our leaders would not wait for the Big One to happen before they act,” Rellosa said.

The Philippine Institute of Volcanology and Seismology has warned that about 33,000 people could die if a 7.2 magnitude quake caused by the West Valley Fault ravages Metro Manila and nearby areas.

Officials said the economic losses from the catastrophe could reach P2 trillion, a little less than the Philippines’ P2.6 trillion national budget for this year.

About eight to ten percent of public buildings may be heavily damaged while about 20 to 25 percent may be partly damaged.

Also known as the Marikina fault line, the West Valley Fault starts from the Sierra Madre and runs through Bulacan, Rodriguez, Rizal, Quezon City, the eastern side of Metro Manila including Pasig, Taguig, Muntinlupa, San Pedro, and Sta. Rosa in Laguna and ends in Carmona, Cavite.