Why earthquake insurance should be mandatory
MANILA – The Philippine Insurers and Reinsurers Association (PIRA), the umbrella group of all non-life insurance firms, reiterated the need for a mandatory earthquake insurance following the magnitude 7.2 earthquake in Bohol that resulted to casualties and damages to infrastructure.
PIRA said only a small number of Filipinos are insured against earthquakes because it is considered an “extra expense.”
Only an estimated 12 percent of the country's buildings have a fire insurance policy. From the figure, only 20 percent have earthquake insurance.
"Earthquake is a standard exclusion in a standard Fire policy. You have to 'buy back' this exclusion so you will be covered…It is sad but many clients consider earthquake cover as extra expense since they have to pay extra for it," PIRA spokesman Michael Rellosa said in a statement.
An extra premium of 0.15 percent of the total sum insured is required to cover earthquakes, typhoons, and floods, on top of the 0.1 percent fire premium.
For instance, a P1 million house requires an additional P1,500 in premiums on top of the P1,000 fire premium.
Rellosa said making earthquake insurance mandatory will also make it affordable.
"The only way for earthquake insurance to be affordable is for it to have a huge base. And for it to have a huge base, it must be mandatory," Rellosa said.
Mandatory earthquake insurance is being proposed by PIRA, the Asian Development Bank (ADB), and the Insurance Commission.
"Earthquake is a risk that we all have to face one way or another. It is a reality in this country, just like typhoons. That is why we are pushing for this mandatory insurance to be able to empower our countrymen to face this risk," said Rellosa.
Tuesday's major earthquake caused several buildings, homes and churches in Bohol to collapse.
A total of 591,577 families or 2,957,885 individuals were affected by the quake in the provinces of Cebu, Bohol and Siquijor.