THE PHILIPPINES, one of the most disaster-prone countries in the world, will be insured against earthquake and tropical cyclone-related losses for the next three years through the $225 million worth of catastrophe-linked bonds (CAT bonds) issued by the World Bank.
According to the World Bank, financial protection of up to $75 million will be allocated for losses due to earthquakes while $150 million will be for tropical cyclones.
In total, this translates to P11.38 billion.
Payouts will be made once the predefined criteria under the bond terms are met by an earthquake or tropical cyclone that hit the country.
Six years ago, Typhoon Haiyan (local name Yolanda) claimed over 6,000 lives when it struck the country. The total damage cost was pegged at P89.6 billion.
āThrough the intermediation of the World Bank, these CAT bonds allow the Philippines to transfer natural disaster risks to the capital markets while enabling the authorities to respond quickly to the needs of citizens when calamities strike,ā said Mara Warwick, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.
The financial institution noted that the instrument was the āfirst to be sponsored by the government of an Asian country and the result of a close and long-term partnership between the World Bank and the Philippine government.ā
Most of the World Bankās catastrophe bonds investors were from Europe at 58 percent, followed by North America at 25 percent. Thirteen percent comes from Asia while four percent was from Bermuda.(GMA News)
