Micro, small, and medium-sized enterprises (MSMEs) could soon avail of an insurance product that would help them get back on their feet after natural or man-made disasters, top government and private sector officials said.
In a press briefing earlier this week, officials announced the ongoing development of a micro disaster risk insurance (MicroDRI), which would become available sometime in the middle of the year to an initial number of 10,000 MSMEs.
This was made possible by the cooperation of the following government and private sector players: the German government’s GIZ Philippines, the Department of Trade and Industry (DTI), Cebuana Lhullier, and AXA Philippines.
Officials deferred from discussing the finer details of the product — such as its rates and conditions— but noted that it would be made affordable for MSMEs. The project, which officials said is the first in the world, was prompted by the aftermath of Typhoon Haiyan, also known as Super Typhoon Yolanda, in 2013.
The MicroDRI product under development will be formally launched and introduced to MSMEs through the assistance of DTI.
AXA will design the micro SME insurance product and will serve as insurer of the product, which will then be made available to the public through Cebuana Lhuillier’s wide network, which already covers up to eight million Filipinos through microinsurance.
DTI Undersecretary Zenaida Maglaya admitted that the department was “not very keen” with MSME resiliency at first, noting that they focus instead on stabilizing the prices of basic goods and commodities in the wake of a disaster.
“Even before, I would say the DTI was just more into price stabilization after a disaster hits. Because after a disaster hits, everything and everybody else is back and up in business. After Haiyan, it took six months for business to stand back up again,” she said.
GIZ said in a recent study that a quarter of MSMEs do not reopen after being hit by a major disaster. Moreover, according to the National Economic Development Authority (Neda), more than half a trillion pesos worth of losses and damages were caused by Yolanda.
She said that only a small number of businesses renewed their permits in 2014 after Yolanda, noting that a lot of MSMEs were confused what to do next.
“You can just imagine how many of those who couldn’t go back to their businesses. This [product] is supposed to prepare us while we’re on the right mind,” she said.
Citing a GIZ-led study, program director of GIZ Philippines Antonis Malagardis estimated that MSMEs lose P250 million to P10 million in times of disaster.
He said that any other risk carrier apart from AXA, is “afraid of putting their fingers into this disaster risk insurance because it’s really very high risk.” /jpv
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.