MANILA, Jan. 14 (Xinhua) -- The World Bank has renewed an insurance program to help the Philippines better respond to losses from climate and disaster risks, the bank said in a statement on Monday.
It said the renewal provides 25 provinces in the country with the Philippine peso equivalent of 390 million U.S. dollars in insurance against major typhoon and earthquake events.
"This initiative demonstrates the Philippines' strong commitment to continue investing in innovative financial solutions that will mitigate the impacts of major earthquakes and extreme climate and weather-related events," said Mara Warwick, World Bank country director for Brunei, Malaysia, Philippines and Thailand.
"The program complements the country's overall strategy and efforts in ensuring resilience against natural disasters and climate change impacts," she added.
Under the program, the World Bank enters into an agreement with private reinsurers to provide coverage against disaster and severe weather impacts for national government agencies and 25 participating provinces.
Insurance payouts are made when pre-defined parametric triggers are met, the statement said, adding that the Philippines Government Service Insurance System provides the parametric catastrophe insurance coverage.
The renewed policy nearly doubles the coverage under a 2017 policy, facilitated by the World Bank through a catastrophe swap, that provided the Philippine peso equivalent of 206 million U.S. dollars in insurance.
Coverage under the new policy became effective on Dec. 19, 2018, said the statement.
The World Bank said it is also supporting the Philippines in preparing a sovereign catastrophe bond to complement the existing insurance program by providing cover for more extreme events.
The Philippines is among the world's most vulnerable countries to natural disasters. The archipelagic country is expected to incur, on average, 3.5 billion U.S. dollars in asset losses each year due to typhoons and earthquakes.
