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Mainstreaming Risk Transfer

Mechanisms: Challenges and

Lessons Learned

Risk Transfer Mechanisms and Climate Change: Towards a Policy

Reform Agenda

Jimmy Loro

14 May 2014

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Outline:

• GoP Policy Basis for Climate Change response

• GIZ Initiatives on Climate Change and RTM

• Challenges

• Lessons Learned and Recommendations

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Food Security Action Plan includes accessible crop weather

index based insurance products

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Adaptation Pillar

9.4 Climate Responsive Agriculture

Strategic Priorities e. Strengthen the crop insurance

system as an important risk sharing

mechanism to implement weather

based insurance system

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Funding Mechanisms

• Republic Act No. 10174, “Climate Change Act of 2009” (People’s

Survival Fund)

• Republic Act No. 10121 “Philippine Disaster Risk Reduction and

Management Act of 2010” (Local Disaster Risk Management Fund)

• Republic Act No. 9520, “Philippine Cooperative Code of 2008” (Community Development Fund)

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Support to the Climate Change Commission in the

implementation of the National Climate Change

Strategy and the National Climate Change Action Plan

Component 2:

Capacity Development

Capacities at the local

level for development and

implementation of climate

strategies

and action plans are

increase and are applied

in implementation of

concrete priority

adaptation and mitigation

measures

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Regulatory Framework Promotions for Pro-Poor

Insurance in Asian Countries (RFPI-Asia)

Expected Outcomes

• National regulatory and

supervisory policies on

microinsurance in general and

on thematic issues are

developed and/or adapted

• Selected countries have

conducted self-assessments

and have utilized these to

inform their regulatory and

supervisory policies

• Insurance supervisors have an

increased awareness of

microinsurance-sensitive policy

and improved capacities for

further promotion of

microinsurance

• Publications on microinsurance

regulations and policy reforms

on thematic areas are

disseminated

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Lesson from PPP: “No single institution can do it by itself”

Sustainable

solution

Private Sector

(Business Opportunities)

Public Sector

(Public Service)

Development Agencies

(Capacity Development)

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Challenges:

- Insurance Literacy: Financial Literacy

- How to access and use public funds for RTM products

- Product Development:

- Technical Expertise

- Development of Effective and Simple products

- Government-regulated and centralized source of data: Weather,

Yield, cropping calendars, etc.

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Challenges:

- Roles of Public and Private Partners:

- How to maximize Government subsidies: Cost-benefit

analysis

- Cost-sharing

- Propriety of technology and designed product

- Effective and functional Adaptation, Rehabilitation and RTM link-

up

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Lessons Learned and Recommendations:

• Synchronized and continuing Insurance and Financial

Literacy through public-private initiatives. Emphasis on value

and use of insurance

• Developing government Offices/Policy Makers’ understanding

on innovative mechanisms and products (ex. Natcat bonds,

radar-based data)

• Design IRR on the use of RTM funds to access innovative RTM

products particularly for the poor

• Design IRR on use of ex ante instruments to secure public

infrastructure

• Government subsidy through availability of various data on a

centralized platform for the design and access of innovative

products

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Lessons Learned and Recommendations:

• Demand/risk and feasibility - driven product design

• Developing local capacity on product development, in

continuous consultation with Reinsurers

• Effective regulation: Use of benchmarks from recognized

institutions to confirm with international standards and balance

risks

• Cost-benefit analysis of Government subsidies on

information, including sector - sharing (Food security, Forestry,

infrastructure, etc.)

• Cost sharing design: Clear Public and Private sector Financial

and Supportive Policy Counterparts

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Lessons Learned and Recommendations:

• Cost sharing design: Clear Public and Private sector Financial

and Supportive Policy Counterparts

• How to access and mobilize existing public funds to

support innovative RTM products?

• What are the roles and responsibilities of National and

Local offices?

• Final ownership of innovative products’ design to ensure an

open market and maximize outreach: Government? Private

Sector?

• Government Policy on the strategic linking of Adaptation,

Rehabilitation and RTM with clear delineation of coverage,

functions and funds.

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Thank you