LONDON—Finance Secretary Carlos Dominguez III met here with officials of Lloyd’s of London and the World Bank this week to discuss possible insurance structures that could be applied to cover the Philippines’ expanding roster of government assets and properties.

Dominguez said he took the opportunity to meet with executives of Lloyd’s, the world’s leading insurance and reinsurance market, to learn about global best practices and ways of strengthening the Philippines’ fiscal resilience to varied risks in the event of disasters and climate-change related incidents, especially now that the government is rolling out a massive infrastructure program.

“We are embarking on a large infrastructure program and we expect to spend somewhere 150 and 170 billion US dollars in improving our physical infrastructure. Leaving it and building it without thinking about risk management is irresponsible,” Dominguez told Lloyd’s officials during the meeting.

Dominguez said the government’s growing list of assets would include underground rails, long-span bridges, light rail and additional railways, airports and seaports under President Duterte’s centerpiece program “Build, Build, Build.”

“These assets are all owned by the national government, some by state-owned enterprises, and most of these have no solid framework for risk management,” Dominguez said.

Among the officials of Lloyd’s present at the meeting were Dr. Trevor Maynard, Head of Innovation; and Lucy Stanbrough, Innovation Associate.

Also at the meeting were officials of Lloyd’s Disaster Risk Facility: Gina Butterworth, Director of Underwriting, Nephila Syndicate Management Limited; James Mitchell, Senior Vice President for Underwriting, RenaissanceRe; Tim McMahon, Global Chief Underwriting Officer, Property Insurance, XL Catlin; and Claudia Thyme, Director Emerging Markets Development, XL Catlin.

They briefed Dominguez and National Treasurer Rosalia de Leon about the operations of Lloyd’s of London and the services it offers under its Disaster Risk Facility.

Nicola Jenns and Dr. Daniel Clarke of the UK Department for International Development and Olivier Mahul, Global Lead and Program Manager for Disaster Risk Financing and Insurance of the World Bank were also at the meeting.

Lloyd’s officials also gave Dominguez and De Leon an overview about the different public asset insurance structures that the Philippine government can tap to improve coverage for its assets and properties.

After the briefing, Dominguez instructed De Leon to continue the Bureau of the Treasury’s engagement with Lloyd’s and the World Bank to discuss an appropriate insurance protection structure that could be put in place at the soonest possible time for the government’s assets and properties.

The Philippine government, Dominguez said, wants to create a national system where various state entities, down to the local government units, can rely on a rational structure to evaluate risks and access resources for risk protection and management through a public asset insurance program.

Dominguez acknowledged that the government faces an enormous task of formulating this type of public insurance structure, given that the Philippines is now just starting to come up with its registry of national assets.

He said a pending bill seeking to create a Department of Disaster Management and Resilience (DDMR), which President Duterte had urged the Congress to pass at the soonest, should be complemented by this initiative to improve insurance coverage of government assets.

“It’s our job in the Department of Finance (DOF) to spearhead this effort of expanding insurance coverage for state assets,” Dominguez said.

In terms of natural disasters, a catastrophic risk modelling developed for the Philippines shows that the country is expected to incur, on average, P177 billion in annual losses to public and private sector assets arising from typhoons and earthquakes.

Ensuring comprehensive and adequate insurance protection for government assets would help shield the fiscal budget from volatile shocks arising from catastrophic events and would also safeguard the government’s long-term development objectives.

While some state assets are insured, in most cases, these are either inadequate to indemnify the government or lack the budget for premium payments.

A pilot program to inventory government assets and properties through a National Asset Registry System is currently being done by Department of Education (DepEd), Department of Public Works and Highways (DPWH), Department of Health (DOH), Department of Social Welfare and Development (DSWD), and National Irrigation Authority (NIA), in coordination with the Bureau of the Treasury (BTr).

The relevant information in the Registry will help in crafting the appropriate insurance structure for the government.

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