Natural disasters expose Philippines’ growing insurance gap

The year 2025 has brought a series of natural disasters that have devastated and affected communities across the Philippines, the most recent being Super Typhoon Uwan. A January report from the Senate Economic Planning Committee estimated that the country lost around P911 billion to natural disasters between 2000 and 2023.

When the country braces for another round of typhoons, floods, and earthquakes, a single question often surfaces: how well are Filipinos insured against disaster?

Across the archipelago, a wide range of public and private insurance products now cover natural calamities — yet the degree of protection varies widely, depending on income, geography, and insurer.

Property insurance: Fire and 'acts of nature'

Among private insurers, the most common disaster coverage falls under Fire and Allied Perils or Property All-Risk policies, which protect homes and businesses from fire, lightning, and a suite of “acts of nature” such as typhoons, floods, and earthquakes.

Top non-life insurers — including Malayan Insurance, AIG Philippines, FPG Insurance, AXA Philippines, Etiqa Philippines, Prudential Guarantee, and MAPFRE Insular — all offer variations of these policies.

Malayan’s Home Protect and AIG’s Property All-Risk plans, for instance, include earthquake, flood, and typhoon coverage either as default features or add-ons. AXA’s Home Security plan and FPG’s Business Shield package also extend to storm and flood damage.

Premiums are risk-based but regulated. According to the Insurance Commission, insurers must charge at least 0.05% of the sum insured for typhoons and floods, and 0.10% for earthquake coverage, per year. A mandatory 2% deductible on the property’s actual cash value applies to typhoon and flood claims. In practice, insurers often charge higher rates in high-risk zones such as coastal or flood-prone areas.

For example, a homeowner insuring a P2 million property might pay around P1,000 annually for flood and typhoon coverage and P2,000 for earthquake protection — at the minimum regulatory rates.

Agriculture insurance: The PCIC’s frontline role

For farmers and fishers, protection comes from the Philippine Crop Insurance Corporation (PCIC), a government-owned insurer under the Department of Agriculture.

The PCIC provides coverage for typhoons, floods, drought, pests, and diseases across crops, livestock, and fisheries. Premiums are typically subsidized by the government, with farmers paying only a fraction of the actuarial cost.

Indemnities are based on the cost of production per hectare or pre-agreed schedules. For instance, after Typhoon Julian in 2024, PCIC distributed P10,000 cash indemnities to affected farmers in Central Luzon and Bicol. Livestock insurance premiums range from 3 percent to 12 percent of the insured value, while crop insurance varies depending on risk exposure.

PCIC President Jovy Bernabe noted in a recent briefing that the agency’s goal is to “provide not just relief, but continuity of livelihood after disasters.”

Microinsurance: Affordable protection for the masses

To reach low-income Filipinos, microinsurance providers like Cebuana Lhuillier Insurance Solutions (CLIS) and CARD MRI offer low-cost protection plans covering fire, typhoon, flood, and earthquake.

Cebuana’s HomeCARE and NegosyoCARE plans, for example, offer payouts of up to P20,000 for annual premiums as low as P250. CARD MRI’s Sagip Plan bundles calamity assistance with microfinance products, allowing clients to quickly access funds after disasters.

Microinsurance policies typically promise fixed indemnities and rapid claim settlement, often within 20 working days after verification. The Insurance Commission defines microinsurance as products with premiums not exceeding 7.5 percent of the daily minimum wage in Metro Manila.

Government and Parametric Insurance Programs

At the national level, the Philippines has tapped into parametric and catastrophe (CAT) insurance mechanisms supported by the World Bank. These programs trigger payouts automatically when defined disaster parameters — such as rainfall intensity, wind speed, or earthquake magnitude — are met.

In 2023, the Philippines renewed a $225-million (P11.4 billion) catastrophe bond, providing quick-access liquidity in case of large-scale typhoons or earthquakes. Unlike traditional insurance, parametric payouts go to the national treasury or local government units, not individuals.

The coverage gap

Despite these offerings, the Philippines still faces a significant “protection gap.” Data from the Insurance Commission show that less than 20 percent of households carry any form of disaster-related property insurance.

Flooding and typhoon damages remain underinsured, with many Filipinos relying on government relief instead of formal indemnities.

Experts point to affordability, lack of awareness, and the perception that insurance claims are difficult to process as key barriers. The Commission, meanwhile, continues to promote financial inclusion and microinsurance expansion, aiming to insure 50 million Filipinos by 2025.

With climate change intensifying, the insurance industry’s role is expanding from financial recovery to proactive risk management. As the storms keep coming, one thing is clear: insuring against the inevitable may be the only sustainable form of resilience.