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Willis, a business of insurance and reinsurance broker WTW and Rare, the global conservation organisation have teamed up to launch a parametric insurance solution for small-scale fishers in the Philippines, with capacity provided by the Natural Disaster Fund (NDF).
According to the announcement, both the Government of the Philippines, through the Bureau of Fisheries and Aquatic Resources (BFAR) and the Philippine Crop Insurance Corporation (PCIC) have partnered with the firms to launch the solution, which marks a first of its kind for the country.
Moreover, the partnership will insure the livelihoods of 14,200 small-scale fishers across 24 coastal municipalities in the Philippines, through a parametric insurance policy that’s designed to mitigate income losses resulting from extreme weather conditions, which hinder safe fishing in nearshore waters.
The Natural Disaster Fund, a public-private partnership funded by UK and German governmental entities, supported by Hannover Re and managed by Global Parametrics, will provide the capacity to support the parametric risk transfer product.
The solution, which has been designed to be affordable and scalable, will reportedly offer timely and predictable financial support to fishers when weather conditions are deemed unfavourable.
The solution will also utilise a parametric index that is calculated over five-day periods and compared against historical data to determine the ‘severity’ of the weather relative to expected conditions.
With changing weather patterns, helping to protect the livelihoods of small-scale fishers is a national priority for the Government of the Philippines. BFAR is piloting this coverage as a benefit to fisher registration and serves as the policyholder.
It has also been confirmed that the BFAR will offer this parametric insurance coverage to small-scale fishers as a benefit for commitment to sustainable fishing practices.
The government agency has allocated a portion of its budget to fund the premium costs for this pilot, which demonstrates strong government support for innovative approaches to climate risk. The coverage will reportedly provide up to USD$100 per policy cycle to help offset income loss from dangerous weather.
Dr Christopher Au, Head of APAC Climate Risk Centre, at Willis, commented: “With over 1.9 million registered small-scale fishers relying on the nearshore for their livelihoods, the impacts of climate change, such as high winds, rough seas and heavy rainfall, pose increasing risks to their safety and income. The new insurance solution, the first of its kind in the Philippines, uses a weather index based on wind speed, sea state and rainfall to determine payout eligibility, ensuring timely and direct compensation to fishers when fishing days are lost.”
Brett Jenks, CEO of Rare, said: “Bad weather can cause serious hardship for fishing households throughout the tropics. This pilot takes a proven product – parametric insurance – and applies it to a new context, insuring people rather than assets. The result will be less financial pressure on households, less fishing pressure on ecosystems, and more resilient coastal communities.”
Chip Cunliffe, Senior Director of Innovation and Pipeline Development at ORRAA, added: “As climate change intensifies and weather patterns become increasingly unpredictable, small-scale fishers face mounting risks to their safety and livelihoods. This partnership represents a vital step in building market-ready solutions that deliver innovative financial solutions like parametric insurance to help protect income and build the resilience of climate vulnerable coastal communities in the Philippines.”
Israel Q. De La Cruz, Department Manager at PCIC, who is directly involved in the pilot, said: “This is an important first for PCIC as we explore revenue-based parametric insurance for fishers. We see this as a complement to our existing coverage, offering a faster, data-triggered option that can respond when fishers are unable to go to sea. If the pilot proves successful, we are hopeful it can evolve into a nationally scalable tool for protecting coastal livelihoods.”
NDF backs Willis and Rare’s parametric insurance policy for fishers in the Philippines was published by: www.Artemis.bm
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