Summary - Study On Demand of Insurance For Natural Catastrophes Final

Study on Demand of Insurance for
Natural Catastrophes
Study Report March 2010 Philippines
Microinsurance Innovations Program

for Social Security (MIPSS)
March 31, 2010
Study on Demand of Insurance for Natural Catastrophes
Responsible
Antonis Malagardis antonis.malagardis@gtz.de
Program Manager
GTZ MIPSS
Author
Christian Proebsting CProebsting@gmail.com
Editor
Dante Portula dante.portula@gtz.de
Senior Finance Adviser
GTZ MIPSS
Publisher
Microinsurance Innovations Programs for Social
Security (MIPSS)
microinsurance.ph
GTZ MIPSS Head Office
Insurance Commission Complex
1071 UN Avenue, Ermita, Manila
PHILIPPINES
Antonis Malagardis PhD
Program Manager
antonis.malagardis@gtz.de
March 2010
GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines
March 31, 2010
Study on Demand of Insurance for

Study Report March 2010Philippines
March 31, 2010
Contents
Tables
Figures
Acronyms
Executive Summary
Background
14
II
Objectives of the Study
15
III
Methodologies
15
IV
Analytical Framework and Structure of Report Presentation
16
Part 1 Profile of Pre-selected Provinces
18
5.1
Availability of geo/weather-data
18
5.2
Presence of potential distribution channels
19
5.3
Exposure to and relevance of natural catastrophe risk
19
VI
Part 2 Findings and Analysis: Household Interviews and FGDs
25
6.1
Natcat Risk Exposure and General Vulnerability
25
6.2
Risks and Specific Vulnerability
34
6.3
Risk Preparedness and Coping Mechanism
43
6.4
Financial Literacy & Insurance Design
46
VII Recommendations and Next Steps
53
7.1
Recommendations
53
7.2
Next steps
56
References
58
March 31, 2010
Tables
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Profile of Respondents
Weather Stations in pre-selected provinces
Vulnerability to Environmental Disasters
Social Indicators (NSCB, 2006)
Rice and Corn Production Value
Rice and Corn Yield and Income Per Hectare
Relative Vulnerability
Rice and Corn Damage (BAS 2008 Damage Report)
Damage to Rice and Corn Per Hectare (BAS, 2008)
Asset Values
Family Income and Expenditure per Province (Monthly)
RURAL Household Income and Expenditures
URBAN Household Income and Expenditures
Household Income Patterns, ILOILO
Frequent Hazards and Cost
Frequency of Natcat Occurrence
Risk Proneness for Farming and Non-farming Households
Natcat Costs to Households
Demand for Insurance by Understanding and by Membership
15
19
20
20
21
22
23
24
25
27
28
29
29
31
35
37
37
38
49
Figures
1
2
3
4
5
6
7
8
9
10
11
12
Analytical Framework
Financial Pressures of Households
Perception on Natcat Impact to Households Pre selected provinces
Perception on natcat impact to households - ILOILO Province
Perception on natcat impact to households - CAGAYAN
Perception on natcat impact to households - LEYTE province
Perception on natcat impact to households - AGUSAN del Sur Province
Natcat Coping Mechanisms
Reasons to buy insurance
Perceived benefits from natcat insurance
Monthly insurance premium affordability
Challenges to PCIC crop insurance
17
36
39
40
41
42
43
45
47
48
51
52
March 31, 2010
Acronyms
BAS
BMZ
FGD
GTZ
HH
MBA
MFI
MIPSS
Natcat
NGO
NSCB
PAGASA
PCIC
PPP
Bureau of Agricultural Statistics

German Ministry for Economic Cooperation
Focus Group Discussion
German Technical Cooperation
Households
Mutual Benefit Association
Microfinance Institutions
Microinsurance Innovations Program for Social Security
Non Government Organizations
National Statistics and Coordination Board
Philippine Atmospheric, Geophysical and Astronomical Services Administration
Philippine Crop Insurance Corporation
Public Private Partnership
March 31, 2010
Executive Summary
Within the frame of MIPSS, the BMZ (German Ministry for Economic Cooperation) has approved in mid2009 the commission of 3-year public private partnership (PPP) between the German Technical
Cooperation (GTZ) and Munich Re to develop natural catastrophes (natcat) insurance products targeted
at the poor by using a parametric trigger. Based on the criteria of data availability, risk exposure,
distribution channels and socio-economic profile, four provinces (i.e. Iloilo and Leyte in Visayas, Cagayan
in Luzon and Agusan del Sur in Mindanao) have been pre-selected as pilot areas of the natcat micro
insurance products.
Profiling of the four provinces based on intensive review of secondary data had been conducted
following the selection criteria. Then household interviews and focus group discussions were conducted
in 14 sampled municipalities in the four provinces to generate more detailed information and analysis of
demand for micro insurance products against natural catastrophes. The target populations were
members of cooperatives, farmers, micro-entrepreneurs and other residents in the areas visited
belonging to the low-income sector (class C, D and E) and are prone to the effects of natural calamities.
The presentation of the study findings comes in two parts. First part describes the profile of the preselected provinces. The second part presents the results of the household interviews and FGDs which
supplements the information and analysis provided in provincial profiles. Recommendations are in the
last section of the report.
Profile of Pre-selected provinces

1. Availability of geo/weather data. Iloilo, Cagayan and Leyte display a relative dense system of
weather stations. In contrast, Agusan del Sur is not equipped at all. Recent efforts have modernized
the equipment of weather stations. In 2009, the Korean International Cooperation Agency (KOICA)
installed a modern set of rainfall and water level stations in Iloilo after the last flood in order to
improve the early warning system. A similar project covered the Magat River in Isabela province,
one of the main confluents of Cagayan River. According to PAGASA, plans to extend the early flood
warning system to Cagayan are currently developed. In Leyte, GTZ has equipped several
municipalities with digital rainfall stations within a project on disaster risk management.
2. Presence of potential insurance distribution channels. The Microinsurance Regulatory Framework
now allows MFIs to become channels of microinsurance. There are more than 2,000 MFIs in the
country with combined outreach of about 7 million people. Large MFIs (NGOs and banks) that cover
the whole country also operate in the 4 pre-selected provinces. Many cooperatives are also
operating in these provinces.
3. Socio-economic situation. There are around 2 million people (roughly 400000 households) in the
four provinces that live under the poverty threshold and therefore, represent potential buyers for
an insurance product. They can essentially be found in Iloilo and Leyte. The incidence of poverty and
the incidence of food are strongly increasing from Cagayan to Iloilo to Leyte and to Agusan del Sur.
4. Exposure to and relevance of natural catastrophe risk. The provinces display a very diverse hazard
profile.
March 31, 2010
a. Cagayan is extremely hazard-prone to droughts and floods / typhoons. Agusan del Sur and
Iloilo are more prone to dry spells, but also to floods. Leyte is less prone to natural disasters.
b. In terms of asset exposure, Cagayan and Iloilo have a high production value in rice and corn,
but the greatest fraction of farming households can be found in Agusan del Sur. Exposure
per hectare can rise up to P50000 to P60000, depending on the crop.
c. Stronger natcat impacts in recent years, high exposure and missing capacities make the rice
and corn sector highly vulnerable in Cagayan. Iloilos rice farmers suffer big damages
stemming from drought, whereas in Agusan del Sur and Leyte the most important damages
arose in the rice production due to floods. Demand for insurance should arise according to
these lines.
d. Affected farmers incur losses from P2000 to P15000 per hectare, depending on the natcat,
the crop and the province. This should determine the expected payout of an insurance
scheme.
Results of Household interviews and FGDs

1. Natcats are a #1 risk for poor households. They are very frequent events and entail large costs,
especially for the agricultural sector. Many of households declare that they suffer at least once a
year from a specific natcat. This is especially true for marginalized and very poor households living in
areas where appropriate risk preparedness measures by government units are inexistent. More
severe events happen every ten to 15 years.
2. The major hazards are typhoons, floods and drought with droughts generally causing the highest
damage. For all these three hazards, farmers feel more at risk and incur generally three times higher
losses than non-farming households. In particular, non-farming households feel barely risk-prone to
droughts. This differentiation is explained by the fact that direct damage to households is very rare,
but that farmers may lose large parts of their crops. Non-farming households suffer more from
secondary effects through higher food prices and lower demand for their products (if they are not
employed and receive a fixed salary).
a. Iloilo is prone to typhoons, floods and drought, but the impact is more moderate than in
other provinces. Drought plays an important role for farmers and fisher folks, whereas the
residents in Iloilo City suffer from annual floods. A flood control project, however, shall solve
this problem for the provincial capital this year.
b. In Cagayan, especially typhoons, but also floods and drought affect large part of the
population, with damages higher than in other provinces. The yield of farmers first harvest
is generally threatened by long dry spell, whereas typhoons destroy big amounts of the
second harvest. At the same time, the province is also focus point of risk mitigation and
relief measures of the government and donor organizations.
c. Leyte is prone to floods caused by continuous rainfall and/or typhoons, as well as landslides.
People feel extremely at risk of these hazards, comparable to the situation in Cagayan.
March 31, 2010
d. In Agusan del Sur, low-lying areas near the Agusan River are frequently flooded, damaging
especially farmers crops. These floods are triggered by moderate, but steady rainfall.
3. Natcat expose the households to risk in terms of assets and income. The typical respondent has a
permanent asset exposure of about P175,000, where 75% accounts for the house and other assets
are generally business assets (such as vehicles and livestock). Compared to richer people, however,
the respondents have somewhat higher exposure in income than in (household) assets This might
be deducted from the fact that the respondents possess less valuables (except for TVs) and
investments are done either in business assets or in non-permanent goods (such as food,
transportation and tuition fees).
a. Farming households have a high reinvestment rate and have a relatively longer income turn
over period. Therefore, there are high exposures after seeding up to harvest season. The
income of one harvest is supposed to bring the family through the next cropping season.
Therefore, a loss in crops might lead to extreme consequences for farming households.
b. Non-farming households engaged in microenteprises and vending activities have a more
stable income, a higher turnover and shorter income turn over periods, reducing thereby
their exposure to possible impacts of natural catastrophes.
4. Risk preparedness is insufficient in most areas. As a result of the lack of appropriate infrastructure or
risk mitigation plans offered by local government units, natcats affect families and their
communities very frequently. State players have barely developed any capacities to mitigate risks in
the provinces in such a way that people feel unprepared and abandoned. Whereas, seasonal climate
forecasts and irrigation system help some people to a certain extent to cope with droughts. Floods
and typhoons hit most communities with little warning and preparation.
5. Risk coping mechanisms. Most people manage the impact of natcats by borrowing money from
friends, relatives or neighbours and to a lesser extent via savings. Formalized systems, such as
insurance schemes or organized relief programs are rarely in place and are mostly considered as less
effective. At the same time, the impact of natcats exceeds the capacities of these informal risksharing mechanisms, leaving people with major problems in repaying their loans.
6. High demand for natcat insurance. The interest in natcat insurance is high in all four provinces with
Cagayan and Agusan del Sur displaying particularly high figures. In general, there is barely any
difference in interest between farming and non-farming households, but the former are more likely
to be interested in a multi-peril insurance and have higher demand in typhoon and drought
insurance products.
a. In Cagayan, 80% of all households would be interested in an insurance product for
typhoons. Typhoons were also the primary concern during FGDs. However, one fifth of the
farmers being interested in an insurance product would also like to have a protection
against drought.
b. In Iloilo, the picture looks less clear, as both typhoon and flood protection are nearly equally
high in demand. At the same time less people than in other provinces would be interested in
a natcat insurance product there and when offering a specific product (e.g. for the
March 31, 2010
protection against floods) only at most one half of the survey sample would show any
interest. The FGDs revealed a somewhat different picture. Nearly all people were interested
in a drought-insurance, especially farmers and fishermen.
c. In Leyte, people had an interest in typhoon-related insurance products, but even protection
schemes against flooding would be appealing to nearly one half of the respondents.
d. Agusan del Sur displays a clear preference for flood-insurance products, especially among
farmers.
e. People having an idea of what insurance is and those who avail of insurance products have a
bigger demand for a natcat insurance product. But even among those who are not aware of
what insurance is there are still more than 80% interest in such a product. Taking the whole
sample, 86% of the HH respondents are interested in buying an insurance product to protect
them from the impact of natcats and 66% would like to insure their loans.
f.
Quiet surprisingly, even households reporting that they are not risk of a certain calamity are
preponderantly interested in buying a natcat insurance product. About 70% of those saying
not to be at risk of typhoons are interested in such a product. This finding supports the
hypothesis that secondary impact effects play an important role in determining the demand.
7. Product preference. Pricing is the most important issues for most of the groups interviewed. Most
are interested to have a natcat insurance product and that holds true across all four provinces, even
though corresponding to their specific risk profile. The affordability, however, is the most important
single factor that will determine whether a family will decide to purchase natcat insurance. Low
premiums payable in accordance with the households income schedule and high-frequent payouts
make the product appealing to most of the households.
a. In general, the premium amount should be between P80 and P500 per month with slightly
higher willingness to pay in the province of Leyte (probably due to higher income in this
subsample). Surprisingly, farming households would not be ready to pay significantly higher
premiums, though being more affected by natcats. Those not interested in natcat products
often argued that they were not able to pay the premiums, therefore emphasizing the
relevance of low premiums for this market.
b. Benefits are also a primary consideration. Participants in the FGD equate that the amount
contributed should more or less be proportionate to the amount of benefit that they will
receive. About 57% of the HH respondents prefer to receive payouts for calamities that
occur frequently to payouts for severe calamities that seldom occur. Frequent as
understood by most FGD participants means more or less every year. Farmers would like to
have benefits around P20000; others would expect an amount of about P5000. When
confronted with the challenge of setting up a financially sustainable product, people usually
lowered the amount of benefits instead of increasing the premiums.
c. System of distribution should not only be easily accessible with putting the client in the
focus, but the insurance provider shall be trustworthy. It is important to note that NGOs,
MFIs and cooperatives are not per se perceived as trustworthy entities. Respondents of the
HH survey endow them with more trust than private companies, such as banks, private
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March 31, 2010
insurers, and PCIC, but have more faith in barangay related institutions. The Philippine
meteorological agency PAGASA is also considered as a relatively trustworthy organization.
d. Information is also critical in successfully distributing natcat insurance. Most of the
participants do have some basic understanding about the concept of insurance. But what
seems to prevent them from availing insurance products (other than the price factor) is
information where to get it and information on how it actually works. Only one quarter of
the people interviewed availed of insurance products, especially for health and funeral preneed plans. This subsample tends more than others to be interested by natcat insurance
products.
e. Modality of transactions shall be easy. Having an agent collecting the money was the most
preferred option among HH respondents, but others were also ready to go to the nearest
insurance office if there is one near the market place. The results suggest that known
concerns of trust, but also other obstacles, especially ignorance of how it works shall be
addressed first before introducing such an insurance scheme.
8. Financial Literacy. Insurance protection is commonly understood by the FGD groups as a means of
security against unforeseen events. Policyholders are receiving some form of benefit that will help
their family to recover from incurred losses. Especially those being MFI clients or cooperative
members were familiar with the basic concept. In the HH sample around 60% declared
understanding the concept of insurance. Still, when probing deeper and asking about possible
reasons why people buy insurance or how the payout process works answers were quite varied.
Recommendations
Designing a flexible, scalable, well timed, linked and simple product that is accompanied by inclusive
education programs shall help to reduce the premium benefit gap. On the one hand, successful
products from private insurance companies, such as St. Peters Life plan, show that the poor are
interested in well-designed products. On the other hand, even highly subsidized crop insurance products
do not sell because they fail the poors needs.
On Product Design:
1. Products should be scalable. People look first on the premium before considering benefits.
Premiums are affordable if they match other non-basic expenses and the survey shows that even
those living under the food-threshold are willing to pay for insurance under certain conditions.
2. Payment schedules should be flexible. Target customers are more likely to purchase natcat
insurance if premium payments are well within their natural or usual cash flow cycles.
3. Products shall have a good timing. Hazards have different probabilities to occur across the year.
Exposures are unequally distributed in time as well. People are more attracted to products that
cover high-exposure- and high-probability-of-hazards-periods. Marketing shall consider this timing
as well. For instance, typhoon protection plans shall be marketed not earlier as shortly before the
beginning of the typhoon season.
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March 31, 2010
4. Payouts should be frequent. Target customers are interested in knowing whether the product works
or not. Therefore, frequent payoutsthat is to say, at least every three harvest seasons, but at best
in the first harvest seasonshall help to build up credibility and to attract customers. People have a
high discount rate and expect fast returns. It is more important for them to have more, but small
than little, but high payouts.
5. Products should be linked, for example to production loans, to group structures like coops/MFIs and
to savings products (bundle).
6. Consider smart subsidies. People expect returns when investing money. Even though insurance is
considered as a tool to reduce risk, for most people it is also an investment that should guarantee
good benefits. Subsidized products in the market (such as PhilHealth) have increased such
expectations. The gap between the willingness to pay and the expected payout might be bridged via
smart subsidies. In some sense, these subsidies are expected from the target population and might
well be justified. It is important to clarify and make transparent the costs and benefits of subsidies
before introducing them. A smart way of dealing with subsidies is by using risk-layering systems: the
state might cover a certain risk-layer such as low-frequent and high-impact events, thereby reducing
the risk for the insurer and ultimately the premium for the end client.
7. Lessen requirements. Natcat insurance should be available for everybody, but especially promoted
for the poor by using corresponding distribution channels. Documentary requirements, if any,
should be made simple and easy to understand and easy to accomplish and should be designed to
match the literacy level of the poorest farmers.
8. Promote financial literacy first. Low-income groups need to be further educated on insurance and its
importance. There should be a general insurance education program aimed at both the end client
and the distribution channel.
9. Target the right pool of clients. Microinsurance products are not right for everyone, at least not at
every time. When people fail to meet their basic needs because they lack sufficient infrastructure or
when no risk mitigation projects have been developed to protect their community from frequent
natcats, micro insurance might not be an appropriate solution. As a matter of fact, targeting
communities with strong and active Disaster Coordinating Council or Planning and Development
Officer might be a way of making sure that the insurance initiative is flanked by similar projects
helping to protect the community. For instance, developing early warning system facilities and
designing index-based insurance products might go hand in hand.
On Product Distribution:
Microinsurance is commonly provided by MFIs/cooperatives as a means of mitigating risks in case the
borrower is unable to pay the loans because of unforeseen events. Accidents, illness in the family, death
of family members or loss of livelihood due to fire or natural catastrophes often causes burdens on the
familys finances. Credit life insurance products and/or micro-insurance are offered to provide the client
a means for recovery in times of such unforeseen events.
Insurance products have also become a source of competitive advantage for MFIs. Clients now choose
their MFIs based on the services and benefits they provide and the insurance products offered by an
MFI. MFIs have been known to compete on this basis.
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March 31, 2010
1. The natcat insurance itself should be attractive, not only to the target clients but also for the
insurance distribution channel. MFIs will most likely adopt or distribute such insurance product if
there are also clear benefits that will be received at the level of the MFI. Offering such products will
also entail costs in its distribution and therefore such distribution costs should be recoverable from
the sale of the insurance product.
2. A certain degree of flexibility should be allowed at the MFI level to customize the delivery of the
insurance product. At the distribution level MFIs are in the better position to determine the most
appropriate timing or mode of payment to be made for the insurance premiums.
3. MFI networks may also play a role in the distribution for micro insurance products to achieve
economies of scale. The MFI network can provide marketing and promotion support to its member
institutions with regards to micro insurance. The MFI network can also provide meso level
monitoring of product performance and provide the sector with research and information support
not normally available at the MFI level. Capacity development support can also be another role MFI
networks can play.
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I.
Background
Due to its location along the western rim of the Pacific Ring of Fire and the Pacific typhoon belt, the
Philippines is one of the worlds most natural disaster-prone countries. In particular, it is vulnerable to
typhoons, floods, landslides, droughts, volcanoes and earthquakes. When the tropical storms Ondoy
and Pepeng struck in October 2009, the Office of Civil Defence estimated the damage to agriculture
and infrastructure at close to P30 billion, that is roughly 0.25% of annual GNP (2008: P14784 billion,
IMF). Besides, there is an average of 25 typhoons hitting the Philippines every year. Finally, climate
change is likely to increase the countrys vulnerability to natural hazards because extreme weather
conditions are predicted to hit formerly unaffected areas.
The poor do not have access to natural catastrophes (natcat) insurance. In 2006, there were around 28
million poor people in the Philippines including 13 million women, 2 million farmers and some 0.5
million fisherfolks1. There is no data on how many of the poor are covered by insurance schemes.
However, it is known that roughly 5% of the Philippine adults (2.5 million) avail of micro insurance
products, but these are generally confined to life, credit life and health insurance2. Pure natural
catastrophe insurance schemes are non-existent for the poor.
Primary insurers are reluctant to go into the natcat business. The Philippines can count a few years of
experience in providing micro insurance through mutual benefit associations (MBAs) and a number of
cooperative insurers, as well as commercial insurance companies. Microfinance institutions (MFIs), rural
banks and farmers organizations complement the range of common distribution channels.
Financial institutions for the poor do not have sufficient access to portfolio insurance. The poor are
very vulnerable to the impact of natcats and might unable to fulfill their obligations to their lending
institution in case of an extreme event that affects their livelihood. This puts the MFIs and cooperatives
loan portfolio at risk, especially if the natural catastrophe hits a large part of their clients. Credit defaults
and withdrawing of saving deposits might undermine their financial performance.
Stakeholders have joined hands to lay the groundwork for micro insurance. In response to these
deficits on the supply side, stakeholders in the government and the financial sectors took up their work
in early 2009 to lay the groundwork for a more comprehensive micro insurance provision. On January 29
this year, the government launched the National Strategy for Micro Insurance that defines the objective,
the roles of the various stakeholders and the key strategies to be pursued in enhancing access to
insurance by the poor. Concretely, it allows registered cooperatives and MBAs in addition to commercial
insurers to engage into the provision of non-life insurance schemes, including products for the
protection against natcats. The GTZ project Micro Insurance Innovations Programme for Social
Security (MIPSS) has contributed to the groundwork development for Microinsurance. MIPSS is a 4year BMZ funded with project components i. frame conditions for micro insurance; ii. micro insurance
innovations; and iii. social protection in case of illness.
Against this background, and within the frame of MIPSS, the BMZ (German Ministry for Economic
Cooperation) has approved in mid-2009 the commission of 3-year public private partnership (PPP)
between the German Technical Cooperation (GTZ) and Munich Re to develop natcat insurance products
1
2
National Statistical Coordination Board, Philippine Poverty Statistics, 2006 estimates

Department of Finance, Philippines
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March 31, 2010
targeted at the poor. By using a parametric trigger these products should overcome obstacles of
traditional insurance schemes. Based on the criteria of data availability, risk exposure, distribution
channels and socio-economic profile four provinces have been pre-selected to pilot the micro insurance
products.
The presentation of the findings comes in two parts. First is a description profile of the pre-selected
provinces following analysis of secondary data. The second part presents the results of the household
interviews and FGDs. The second part supplements the information and analysis provided provincial
profiles.
II.
Objectives of the Study
First, it shall complement the pre-selection process. Second, it shall generate information and analysis of
demand for micro insurance products against natural catastrophes in the pre-selected provinces that
will serve as an input to the detailed in-depth assessment.
III.
Methodologies of the Study
The Study employed the methodologies of household (HH) surveys with structured questionnaires and
focus group discussions (FGDs) with potential microinsurance clients. Intensive reviews of secondary
data that are describing the 4 pre-selected provinces were conducted prior to the field work.
The survey was conducted in three to four municipalities in the pre-selected provinces of Agusan del Sur
(Mindanao), Cagayan (Luzon), Iloilo and Leyte (Visayas). The target populations were members of
cooperatives, farmers, micro-entrepreneurs and other residents in the areas visited belonging to the
low-income sector (class C, D and E) and are prone to the effects of natural calamities.
The HH questionnaire is structured into four main parts about i. HH information and economic activities,
ii. access to credits, iii. risks, iv. access and interest in insurance. The first parts aim at obtaining data on
the HHs exposure in terms of assets and income, and her vulnerability. The second part is dedicated to
the HHs (obstacles to) access to credits. How different hazards affect the HHs budget and how HHs
cope with these risks shall be clarified in the third part. Finally, questions of familiarity with insurance,
interest in natcat insurance products and issues of product design are addressed in the last part. Table 1
provides the profile of survey respondents.
Table 1 Profile of Respondents
Province/# Municipalities
# of HH
Respondents
# of FGDs (Ave Pax

per FGD = 10)
Leyte / 4 Municipalities
94
Iloilo / 3
182
Cagayan / 4
103
Agusan del Sur / 3

Total = 4 Provinces
= 14 Municipalities
108
487
3
22
Sector of Participants
Clients of banks, coops;
students
Clients of NGO-MFI; local
residents
Clients of banks and
coops
Local residents, farmers
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March 31, 2010
IV.
Analytical Framework
The UNDP report on reducing disaster risk constitutes the main reference of this report, as it cuts down
the notion of risk into the concepts of hazards, exposure and vulnerability. This objective framework
is adapted to allow for integrating the subjective perception of risk. Risk perception constitutes the
driving force for demand, but several constraints might shape this demand as well, such as financial
literacy and product design.
Risk = Hazard x Exposure x Vulnerability. UNDPs report A Global Report Reducing Disaster Risk: A
Challenge for Development, published in 2004, presents a conceptual model to grasp the notion of risk.
Accordingly, disaster risk is not caused by hazardous events per se, but rather is historically constructed
through human activities and processes. For an extreme physical event to be hazardous, by definition
there has to be a subject to experience the hazard. But pure physical exposure is insufficient to explain
different risk patterns across countries. For a given exposure the impact of a hazard can vary and
depends largely on the underlying vulnerability. Some individuals and/or assets are more vulnerable
than others and may therefore be more or less at risk. As a matter of fact, coping capacities and
adaptive capacities, which shape vulnerability, are unequally distributed across societies and individuals
and may explain large parts of differences in death tolls and damage reports resulting from disasters. In
mathematical terms, the concept can be stated as follows:
Risk = Hazard x Exposure x Vulnerability
Different indicators are used to measure the three factors. Theoretically, the proposed formula can be
used for different contexts, such as risks stemming from illness and man-made catastrophes. For our
purpose, we define hazards as natural disasters, such as earthquakes, typhoons/tropical storms,
droughts, volcanic eruptions, landslides and floods. The distinction between typhoons and floods is
difficult in the Philippine context, as most floods are caused by continuous rainfall that usually goes
together with strong wind. The physical exposure is generally measured by calculating the population
living in a given exposed area. This notion is helpful when focusing on the risk of death, but it neglects
the social and economic impacts of natural hazards, such as injuries and damage to assets
(infrastructure, crops). In this report, we refer to the notion of exposure as expressed in terms of
assets and number of the poor.
The concept of vulnerability is more difficult to grasp. Quantitatively, the relative vulnerability can be
calculated by dividing the damage/people killed by the value/number exposed. More interesting,
however, might be to identify (absolute) vulnerability indicators. Vulnerability depends on the sociopolitical-economic context of the exposed population as well as on the hazard in question. For instance,
national indicators can include GDP, the Human Poverty Index, the Human Development Index, literacy
rate and the relative number of radios (to assess early warning capacity). In our study, we try to
approach the notion of vulnerability by the income per household, occupation, access to financial
services and the efficiency of coping mechanisms.
Exposure to and relevance of risk are related, but two different concepts. While the concept of
exposure to risk per se is a more objective notion that can partly be captured by quantitative methods,
the relevance of risks is a more subjective idea and relies on the perception of the individual. Some risks
may have a large impact in terms of socio-economic losses, but may not be perceived as relevant. The
16
March 31, 2010
perception is influenced by the individuals environment and cognitive capacities. The former is crucial
in evaluating the disasters impact and the latter shape to what extent people are able to recall
memories of disasters. In the end, demand for micro insurance products depends largely on the
relevance of risks and only directly on the exposure to risks. For instance, demand for insurance
products is supposed to be higher immediately after the impact of catastrophes when memories are still
fresh, even though the exposure to risk might have not increased. It should be noted that this concept
correlates with the exposure to risk as it is about the peoples experience on the nature, extent,
frequency and impact of unpredictable risks. And it also takes into account the existence of coping and
adaptation strategies, but the concept adds a further layer in form of subjective perception. While some
statistics will be presented on the exposure to risk, this survey focuses on the question of risk
perception, therefore adapting the UNDP approach.
Several constraints might shape the demand for natcat micro insurance, such as financial literacy and
product design. Risk perception constitutes the driving force for demand. Still, whether people will
eventually be interested in purchasing a product depends on several side-constraints. Having access to
information and understanding these products is an essential aspect. Even though credit and saving
services are popular among the poor in certain areasespecially where MFIs have a high penetration
rateinsurance products are still terra incognito for most low-income households. And finally, the
product design itself should match the needs and expectations and correspond to the payment
capacities of the potential buyers and thereby stimulate their demand. This study tries to acknowledge
these two conditions by analyzing them in a separate chapter.
Figure 1 Analytical Framework
Demand for Insurance
Financial
Literacy
Perception of
Risk
Product
Design
Exposure to
Risk
17
March 31, 2010
V.
Part 1 Profile of the pre-selected provinces
The provinces of Cagayan, Iloilo, Leyte and Agusan del Sur were pre-selected on the following criteria:
1. Availability of geo/weather-data
2. Presence of potential distribution channels
3. Exposure to and relevance of natural catastrophe risk
Intensive review of secondary data might draw the following general observations:
There are around 2 million people (roughly 400000 households) in the four provinces that live
under the poverty threshold and therefore, represent potential buyers for an insurance product.
They can essentially be found in Iloilo and Leyte.
The incidence of poverty and the incidence of food are strongly increasing from Cagayan to Iloilo to
Leyte and to Agusan del Sur.
Cagayan is extremely hazard-prone to both droughts and floods / typhoons. Agusan del Sur and
Iloilo are more prone to dry spells, but also to floods. Leyte is less prone to natural disasters.
In terms of asset exposure, Cagayan and Iloilo have a high production value in rice and corn, but the
greatest fraction of farming households can be found in Agusan del Sur. Exposure per hectare can
rise up to P50000 to P60000, depending on the crop.
Stronger natcat impacts in recent years, high exposure and missing capacities make the rice and
corn sector highly vulnerable in Cagayan. Iloilos rice farmers suffer big damages stemming from
drought, whereas in Agusan del Sur and Leyte the most important damages arose in the rice
production due to floods. Demand for insurance should arise according to these lines.
Affected farmers incur losses from P2000 to P15000 per hectare, depending on the natcat, the
crop and the province. This should determine the expected payout of an insurance scheme.
5.1 Availability of geo/weather-data

Since the projects idea is to design an index-based insurance scheme sufficient data on climate
phenomena was a pre-condition in selecting the provinces. This data is used to design an index that
captures very well the correlation between the calamity and the damage caused to the insured
population. With such a parametric insurance product claims are settled based on the index and not on
individual damage assessments. For instance, information on rainfall and wind speed might help in
assessing the strength and impact of typhoons. Despite new technologies and remote sensing via
satellites, ground-based device is still indispensable to obtain reliable data. In the Philippines, the main
reference for weather stations is PAGASA, the Philippine Atmospheric, Geophysical and Astronomical
Services Administration. The following table displays the number of weather stations in the pre-selected
provinces.
18
March 31, 2010
Table 2 Weather Stations in pre-selected provinces
Weather stations
Synoptic station/Agromet
station/Automatic station*
Rainfall
Water level
Radar
Iloilo Province
Cagayan Province
3
3
6
4
2
1
0
1
Leyte Province
Agusan del Sur
4
0
6
0
0
0
0
0
Iloilo, Cagayan and Leyte display a relative dense system of weather stations. In contrast, Agusan del Sur
is not equipped at all.
Recent efforts have modernized the equipment of weather stations. In 2009, the Korean International
Cooperation Agency (KOICA) installed a modern set of rainfall and water level stations in Iloilo after the
last flood in order to improve the early warning system. A similar project covered the Magat River in
Isabel province, one of the main confluents of Cagayan River. According to PAGASA plans to extend the
early flood warning system to Cagayan itself are currently developed. In Leyte, GTZ has equipped several
municipalities with digital rainfall stations within a project on disaster risk management.
5.2 Presence of potential distribution channels

According to the new regulatory framework on micro insurance, institutions engaged in microfinance
activities, primary cooperatives and rural / thrift / cooperative banks can be licensed to sell micro
insurance products. Even though they might not act as risk carrier, they can market products to their
clients.
MFIs have a strong penetration rate in some municipalities. One should consider the fact that most MFIs
only serve one, at most two individuals per household. In the Philippines, a typical household comprises
approximately 5 individuals. Therefore, one might multiply the number of clients by 5 to obtain the
number of households reached by MFIs. Finally, the PCFC database only includes lending institutions
that borrow capital from PCFC. Even though this is mostly the case for bigger MFIs, some locally
operating MFIs are not listed and the actual number of covered households is probably higher.
5.3 Exposure to and relevance of natural catastrophe risk

HAZARD
This study focuses on the impact of natural hazards, in particular typhoons/floods and drought. In a first
step, these hazards should be identified in their sole dimension of climate and geological events; that
means without considering their impact. The following table displays information published in the 2005
study Mapping Philippine Vulnerability to Environmental Disasters by Manila Observatory.
19
March 31, 2010
Table 3 Vulnerability to Environmental Disasters
Hazards
Cagayan
Iloilo
Leyte
Agusan del
Sur
Typhoon Incidence
Historical Rainfall Increase
Historical Temperature Increase
Decrease in Rainfall Due to El
Nio
Earthquake: Magnitude
Earthquake: Hits
Very high
200-300 mm
> 0.5 C
Very low
Low
0 mm
> 0.2 C
Low to
Medium
Low
Very low
Medium
0 mm
0.2 C < 0.5 C
Medium
Very low
0 mm
> 0.2 C
High
Low
Very low
High
Medium
Very low
Very low
The provinces display a very diverse hazard profile. Cagayans fate combines several hazards: It is
frequently hit by typhoons and in recent years an increase in rainfall and temperature suggests that it
faces periods of severe flooding and long dry spells.
Agusan del Sur, on the other hand, is not hazard-prone to typhoons, but more to water shortage due to
decreases in rainfall. In addition, strong earthquakes frequently hit the province.
Iloilo and Leyte, finally, display a more moderate picture, with low and medium, respectively, incidence
of typhoons and decreases in rainfall. As a consequence, the areas are supposed to suffer less from
natural hazards than the other two provinces.
According to the report, climate change in the Philippines is supposed to have two strong effects: First,
the path of typhoons shall move more to Northern provinces, that is away from the Visayas and more to
Luzon. Second, Mindanao is going to experience more dry years. Unfortunately, the study does not
contain any information on the strength of the typhoons. Another pitfall of the analysis is that it does
not capture local disasters, such as flash floods, that only occur in river-near areas.
EXPOSURE
The exposure to natural disasters can be measured in different ways, depending on the subject of
interest. In general, one might distinguish between the number of people and the assets in a specific
area. The following table presents information on social indicators.
Table 4 Social Indicators (NSCB, 2006)
Pre-selected
Provinces
Poverty
Threshold
Poverty
Incidence
Magnitude of
Poor Population
Food
threshold
Subsistence
Incidence
Magnitude of
Subsistence Poor
Magnitude of poor that

are not subsistent poor
Overall
population
Iloilo
14,810
30%
641,619
9,861
11.80%
249,049
392,569
2,110,588
Cagayan
12,928
23%
247,764
9,018
8.30%
89,023
158,741
1,072,571
Leyte
13,919
47%
814,523
9,501
22.90%
394,346
420,177
1,722,036
Agusan del
Sur
14,544
56%
342,509
10,080
33.90%
206,603
135,907
609,447
20
March 31, 2010
Since the project focuses on the poor population the number of people living under the poverty
threshold3 is the critical figure. The four provinces display a very diverse picture. From North to South
the incidence of poverty increases, reaching more than half of the population in Agusan del Sur. In
addition, the fraction of poor people living under the food threshold4 is also twice as high in Agusan del
Sur as in Cagayan and Iloilo. Around 2 million people in the visited four provinces live under the poverty
threshold. On the other hand, nearly 1 million poor have less income than necessary to meet the basic
food requirements. Whether these people have enough income to buy insurance products for the
protection against natural catastrophes is questionable, but this survey is going to shed some light on
this question. It is supposed that rural areas have a higher poverty incidence than in urban
municipalities. Even though the data is suggestive in this respect, it must be noted that the poverty
threshold used in this table is a provincial indicator, that is potential heterogeneity in expenditure
requirements across municipalities is not considered. Therefore, it probably underestimates
(overestimates) the poverty magnitude in urban (rural) areas.
There are several indicators to determine the exposure of assets to natural catastrophes. There is no
reliable statistical information on the value of infrastructure in the Philippines (the second part of the
survey tries to estimate some of these numbers). However, one might try to approximate the value in
different ways. Catastrophes can hit private assets, such as homes, but also assets for business purpose,
such as stores, tricycles and crops. The authors were unable to obtain data on costs for business assets
in urban areas. For rural areas there exist some estimates that are presented in the succeeding tables.
Most households in rural areas depend at least partly on farming. In Agusan del Sur, nearly three out of
four households engage in agricultural activities. And a similar pattern can be observed in Cagayan, even
though relatively more households receive income from fishing and the fraction of non-farming
households is greater. Even though agricultural activities constitute generally only one source of income
among others, it is often the most important one. In the Philippines, there are nearly 5 million farms5.
The number of subsistence farmers is not known, but most of them plant rice (palay) and in some
provinces corn. For this reason, the statistics concentrate on these commodities. The value of annual
production and damage of these two crops might approximate the exposure per province.
Table 5 Rice and Corn Production Value
Production value in Million Pesos (BAS, 2008)

Cagayan
Rice
Corn
Iloilo
10,330
4,588
Leyte
17,250
3,572
7,779
869
Agusan del Sur

2,230
786
Cagayan and Iloilo are one of the major rice baskets in the Philippines. As a matter of fact, Iloilos
current production capacity in rice and corn is more than P20 billion per year (that is around P10000
per capita). The production of rice and especially corn plays a minor role in Leyte and Agusan del Sur.
3
The poverty threshold is defined as the minimum income/expenditure required for a family/individual to meet
the basic food AND non-food requirements. National Statistical Coordination Board (2003)
4
The food threshold is defined as the minimum income/expenditure required for a family/individual to meet the
basic food requirements. http://www.nscb.gov.ph/poverty/FAQs/default.asp)
5
Agricultural and Fishery census 2000
21
March 31, 2010
Breaking down the data to individuals is helpful in identifying the exposure per capita. In the end, it is
individuals who are hit by catastrophes and therefore understanding their exposure is an important
step. In the Philippines, smallholder farmers are typically defined as those having less than seven
hectares. Most poor farmers have even less, typically around one and two hectares. Generally, there are
two harvests per year. Given this, one can calculate the gross income per hectare for the four provinces:
Table 6 Rice and Corn Yield and Income Per Hectare
Yield per hectare (2008, metric ton per hectare)

Cagayan
Iloilo
Rice
3.53
3.30
Corn
3.62
3.56
Income per hectare (pesos, 2008 prices)
Rice
45,987
59,360
Corn
39,998
41,248
Leyte
4.44
1.51
Agusan del Sur

3.40
2.18
56,877
17,180
38,389
23,914
This rough average shows that income per hectare varies strongly between provinces. In Agusan del Sur,
low prices lead to incomes of less than P40000/ha for rice and roughly P24000/ha for corn, whereas
high prices and good yields lead to nearly P60000/ha and P41000/ha, respectively, in Iloilo. In general,
rice farmers have a higher gross income than corn farmers for a given size. These numbers show what is
at stake when there are natural catastrophes like typhoons or droughts destroying part of sometimes
even the whole crop6.
As mentioned above, there are no numbers to assess the exposure in urban areas. The household survey
was conducted in both urban and rural areas to address this shortcoming.
VULNERABILITY:
The concept of vulnerability tries to explain differences in death tolls and damage across regions, even
when taking into account variations in exposure and hazard. Since we have poor data on the strength of
the hazards, we have to restrict ourselves to the concept of relative vulnerability, which is the damage
divided by the exposure. When we see differences in relative vulnerability this can be due to either
different strengths of hazards or different capacities in coping with the hazards. It is beyond the scope of
this study to distinguish between these two effects. Nevertheless, the relative vulnerability might act as
a proxy indication to how vulnerable the different provinces are with respect to various hazards.
Besides, it relates the damage to the production potential and therefore describes the financial impact
in relative terms. Once more, we refer to the vulnerability of the agricultural sector due to data
constraints.
The amount of the disaster-induced loss depends strongly on the growth stage.
22
March 31, 2010
Table 7 Relative Vulnerability
Relative Vulnerability (average, 1994-2008)

Corn
Rice
Overall
Flash floods & Typhoons
Drought
Overall
Drought
Cagayan
22.65%
13.29%
9.33%
9.60%
7.21%
2.21%
Iloilo
0.00%
0.00%
0.00%
1.87%
0.56%
1.28%
Leyte
0.19%
0.15%
0.03%
0.36%
0.31%
0.00%
Agusan del Sur

5.15%
4.43%
0.64%
3.21%
1.50%
0.67%
The provinces of Cagayan, Leyte and Agusan del Sur are generally more vulnerable to flash floods and
typhoons than to droughts. Iloilo, on the other hand, looses a higher percentage of its rice production to
drought than to typhoons. Even though Iloilo is a big corn producer, its cornfields are barely vulnerable
to the impact of neither typhoons nor droughts. This is in contrast with the situation in Cagayan, where
annually more than one fifth of the potential corn production is completely lost. And even for rice this
number is relative high. Given this extreme vulnerability the question whether corn (and rice)
production is still a financially sustainable activity arises. Leyte is clearly less vulnerable than the other
provinces and losses typically accrue to less than 1% of annual production. In Agusan del Sur, corn is
more vulnerable than rice, but it must be noted that the corn production is very low. All in all, the four
selected provinces display a very diverse picture in terms of vulnerability.
RISKS:
The realization of risks can be measured in death tolls and damage. Missing comprehensive and reliable
data on death tolls and damage to non-agricultural assets, we only refer to the crop damage reports
released by the Bureau of Agricultural Statistics (BAS). They show clearly that droughts and flash
floods/typhoons are the most devastating hazards for farming. By restricting ourselves to the rural
sector we neglect risks in urban areas, such as landslides and earthquakes. The household survey in the
second part of this study shall try to shed some light on this issue. The following table displays the loss
for the total of rice and corn production from 1991 to 2008 organized by province and natcat category.
23
March 31, 2010
Table 8 Rice and Corn Damage (BAS 2008 Damage Report)
Damage in Million Pesos (Rice & Corn, 2008 Prices)
Flash floods
Typhoons
Drought
Year 1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Cagayan
Iloilo
552.1
0.0
148.3
401.2
24.3
509.1
0.0
1,218.6
1,176.2
413.2
1,210.9
63.5
1,701.9
2,257.9
1,688.0
1,985.9
249.9
1,701.1
0.0
0.0
0.0
148.3
546.5
19.4
0.0
0.0
0.0
0.0
36.1
0.0
0.7
0.0
16.2
11.9
0.7
253.1
Leyte
56.3
0.0
48.3
41.3
17.9
18.2
0.0
0.0
0.0
0.2
0.0
0.0
0.0
0.0
0.2
102.4
0.0
24.2
Agusan
del Sur
1.5
0.0
14.5
444.5
0.2
85.9
94.9
0.0
47.1
0.0
15.1
0.0
0.0
0.0
0.0
56.3
48.4
1.4
Year 1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Cagayan
0.0
0.0
0.0
0.0
31.0
457.0
191.6
1,030.8
0.0
0.0
0.0
791.0
536.4
0.0
1,729.3
459.4
1,512.7
137.9
Iloilo
181.9
612.7
0.0
0.0
494.8
0.0
0.0
831.5
0.0
0.0
0.0
4.2
376.3
0.0
0.0
0.0
1.4
0.0
Leyte
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.2
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Agusan
del Sur
0.0
0.0
0.0
92.1
0.0
0.0
0.0
124.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Cagayan Province suffers big losses every year

especially due to typhoons and drought. Noteworthy
All Causes
Cagayan
Iloilo
Leyte Agusan
is the trend in recent years that losses usually exceed
del Sur
Year 1991
552.1
181.9
56.3
1.5 P1.7 billion. Droughts and typhoons play both a role
1992
0.0
612.7
0.0
0.0 in this increase. Even though data for 2009 is not yet
1993
148.3
0.0
48.3
16.9 available, one can suppose that damages have
1994
401.2
148.3
41.3
580.6 reached another record because three big typhoons
1995
55.3 1,041.3
17.9
0.2
1996
966.1
19.4
18.2
85.9 (Pepeng, Ondoy and Ramil) hit Northern Luzon
1997
191.6
0.0
0.0
117.3 last year. Typhoons hit Cagayan on an annual basis,
1998
2,249.4
831.5
1.2
271.6 but droughts are somewhat less frequent. Severe
1999
1,176.2
0.0
0.0
47.1 years are typically El Nio years (1998 and 2005). For
2000
460.8
0.0
22.6
0.0
the considered period the average amount per year
2001
1,210.9
36.1
0.0
15.1
2002
854.5
4.2
0.0
0.0 rises up to P1.3 billion (or more or less $25 million).
2003
2,366.7
377.0
0.0
0.0 To sum up, Cagayan is hit by strong and very frequent
2004
2,257.9
0.0
0.0
0.0 disasters and they cause a high amount of damage.
2005
3,417.2
29.3
0.2
0.0
Somewhat surprisingly, the province failed in a
2006
2,461.7
18.4 102.4
56.3
2007
1,771.4
2.1
0.0
48.4 certain sense to adapt to these extreme events. The
2008
1,839.0
295.9
24.2
1.4 high vulnerability patterns show clearly that the
agricultural sector has not developed sufficient capacities to cope with natcats. On the other hand, the
fact that Cagayan is one of the richest provinces in the Philippines might show that farming generates
sufficient benefits in spite of high natcat damages.
24
March 31, 2010
In comparison with Cagayan, other provinces are relatively less affected by typhoons and droughts.
Leyte is safe from droughts and Agusan del Sur suffered only twice losses due to long dry spells. This is
remarkable given the fact that droughts are supposed to be very severe in Mindanao. Iloilo, on the other
hand, is heavier affected by droughts than by typhoons. In dry years, damages typically rise above P150
million, whereas typhoons cause usually not that much damage. One exception is typhoon Frank in
2008. Floods (and typhoons) hit Agusan del Sur and Leyte especially in the 90s, but also in recent years.
However, the damage was clearly smaller than what could be observed in other provinces.
A final table might illustrate the damage on an individual basis, at least for rice and corn farmers. It is
not possible to obtain damage data at farm level, but the crop damage reports include information on
area affected. Conditioned on being an affected area, the following numbers reveal information on the
average damage per hectare.
Table 9 Damage to Rice and Corn Per Hectare (BAS, 2008)
Damage per hectare (in Pesos, conditioned on being affected)

Corn
Rice
Overall
Drought
Overall
Drought
Cagayan
10,367
9,614
13,261
11,205
10,736
15,148
Iloilo
2,827
3,182
1,939
6,810
4,145
11,160
Leyte
2,475
2,475
6,955
7,721
-
Agusan del Sur

6,084
7,282
3,181
7,572
7,206
8,375
The average damage is generally 10% to 25% of the overall production, depending on the province and
the crop. It is interesting to see that drought has generally a more severe impact than floods and
typhoons. These statistics shall help to clarify the expectations of a possible insurance coverage. For
instance, a rice farmer cultivating two hectares in Cagayan and who are affected by drought might ask
for a payout of about P30000 to cover his losses.
VI.
Part 2 Findings and Analysis of Household Interviews and FGDs
6.1 Natcat Risk Exposure and General Vulnerability

The household respondents and FGD participants have an important natcat risk exposure in terms of
assets and income. The typical respondent has a permanent asset exposure of about P175000, where
75% accounts for the house and other assets are generally business assets (such as vehicles and
livestock). Compared to richer people, however, the respondents have somewhat higher exposure in
income than in (household) assets This might be deducted from the fact that the respondents possess
less valuables (except for TVs) and investments are done either in business assets or in non-permanent
goods (such as food, transportation and tuition fees).
Farming households have a high reinvestment rate and have a relatively longer income turn over period.
Therefore, there are high exposures after seeding up to harvest season. The income of one harvest is
25
March 31, 2010
supposed to bring the family through the next cropping season. Therefore, a loss in crops might lead to
extreme consequences for farming households.
Non-farming households engaged in microenteprises and vending activities have a more stable income,
a higher turnover and shorter income turn over periods, reducing thereby their exposure to possible
impacts of natural catastrophes.
For natural catastrophes to have impact on peoples livelihood, there must be physical exposure, either
in terms of people (usually measured in number of people living in a certain area) or in terms of
economic losses (usually measured in money value). Since the insurance product shall not be a life
insurance, our approach focuses on the second concept of exposure in terms of economic losses. To be
more precise, we concentrate on natcat exposures to:
Household assets (for instance, damage to houses)

Business assets (for instance, crop losses)
Business income (for instance, losses brought about by lack of demand from the people/public
affected by natcat who are short of money to spend).
Theoretically, two different proxies could be used to measure the three exposures. The value of
household assets shall determine the first exposure. The value of (business) assets and income (not
added up, but in comparison) shall help to shed light on the size of direct business losses. And finally,
the value of income might approximate the extent of possible losses through lack of demand.
The challenge of attaching a value to these different proxies might be solved in the following way. First,
the emphasis is given to the estimate of the household itself because we are interested in their own
perception and how they evaluate their own assets. Second, we refer to more objective numbers based
on market values to correct for possible strong biases in the households estimates.
The value of assets and especially income are not static, but undergo strong fluctuations throughout the
year. This concern shall be addressed by analyzing low- and high-income months, as well as highexpenditure months. Changing exposures (for the same household, but also across households) have a
direct effect on the risk of natural catastrophes. In months with low exposure, natcats shall have a lower
impact than in high-exposure months.
Based on this analysis, we refer directly to the question of general vulnerability. The extent of
vulnerability, defined as the inverse of coping capacity, might be determined by the households
endowment, but also on how she cope up with seasonal income fluctuations. Natcats are supposed to
result in strong volatilities in income and expenses. Therefore, understanding how households deal with
normal fluctuations and whether these mechanisms are sustainable or fragile shall help to identify the
impact of natcats.
26
March 31, 2010
Risk Exposure to Household Assets

The first table displays the distribution of assets and the typical median value.
Table 10 Asset Values
Asset Values
%
93%
25%
58%
Average
Value
553,857
21,140
4,353
Median
Value
150,000
16,000
1,000
Mean Asset
Value per HH
134,178
3,862
562
7%
64,224
40,000
2,759
Vehicle
Other
Fridge
Bathroom
23%
2%
37%
83%
63,479
13,486
9,771
3,403
45,000
14,000
8,000
2,500
9,949
284
2,888
1,998
TV
Radio
Phone
Cell
PC
73%
38%
7%
78%
5%
6,986
2,792
1,063
3,753
24,765
5,000
1,500
500
2,000
25,000
3,529
551
32
1,513
1,166
House
Heavy Livestock
Small Livestock
Farm machineries
A majority of the respondents own their house or occupy a free house without paying any rent. Typical
household assets include TVs and cell phones, less common are fridges or radios. The high numbers on
heavy and small livestock suggest that many respondents depend on agricultural activities and some
possess even farm machines (tractors, fishing boats). A little bit more than 20% own vehicles, especially
bicycles, tricycles and motorcycles.
The median value of the different assets gives some hints about the exposure. For the respondents, the
house itself was clearly the most valuable asset, even though the amount of P150000 (ca. $3000) might
be somewhat too high. The two most common and valuable household assets are TVs and cell phones
that cost around P110000.
Risk Exposure to Livelihood or Business Assets
For farm activities, livestock (and to a lesser extent farm machineries) are important assets. Heavy
livestock (carabaos and horses) is especially used for plowing the field, whereas small livestock is mostly
possessed on a more temporary basis to generate income through selling. The cost of inputs for
cropping is also a crucial asset that is not reflected in this table. Rice farmers participating in the FGDs
confirm that seeds and fertilizer might cost between P15000 and P25000 per hectare, depending on
the variety (footnote: In a recent crop damage report the Bureau of Agricultural Statistics estimates the
value of seedlings to P12000 per hectare). A typical field size for farmers we talked with ranged
between one and two/three hectares. Therefore, the cost of inputs represents a big investment for
farmers.
27
March 31, 2010
Especially in urban areas business assets include vehicles to take passengers from A to B. Tricycles
(motorcycles) are very common in the Philippines and many people earn their living as tricycle driver.
Such a motorcycle with a sidecar might cost between P30000 and P100000. However, it must be noted
that not all tricycle drivers own their bike. A cheaper version is pedicabs (pedal cabs) that cost up to
P10000.
Women are generally involved in trading activities, either of agricultural products on markets, or in sarisari stores (variety stores). Such sari-sari stores are very common in the Philippines and are either built
within the house or as a small pavilion. Such stores can cost around P50000 and merchandise capital
might go up to P20000. When compared to discussions with market vendors these numbers display the
upper bound. For instance, traders in Abuyog, Leyte, confirmed that they only possess a little pushcart
and buy fruits and vegetables with daily loans, therefore reducing the exposure.
Besides the large part being involved in the agricultural sector (especially rice farming), many male
respondents earn their livelihood as labourer (e.g. construction worker) or do other work (e.g. tricycle
driver). As described above, women generally stay at home or run small shops. Other activities women
practice includes clothes washing, small manufacturing and housekeeping.
Splitting down the sample into the four provinces reveals that especially farming households were
interviewed in Leyte, whereas Iloilo has the highest fraction of non-farming households7. This is because
one of the three covered areas was the capital, Iloilo City (fn: Cagayans capital Tuguegarao was also
included in the sample, but it is a smaller town and does also give home to many farmers.). All in all, the
number of farming households is too low and does only correspond in Cagayan to the actual percentage.
Risk Exposure to Household Income
Table 11 Family Income and Expenditure per Province (Monthly)
Monthly Income & Expenditure per province (Peso)

Income
Iloilo
Cagayan
Leyte
Agusan del Sur
6,457
14,544
19,477
8,631
Expenses
5,417
7,477
15,944
6,504
Income and expenditure patterns in our sample vary across provinces, but this might be more due to the
selection of households than to the provinces itself. Especially the figures for Leyte appear quite high.
Farming households are defined as households where at least one member declares being involved in an
agricultural activity or where at least one income source is from agricultural production/livestock breeding.
Households that are not farming households are non-farming households.
28
March 31, 2010
Table 12 RURAL Household Income and Expenditures
Household Income Rural

Sources
Permanent Job
Household Expenditure Rural

#
56
Median
6,000
Mean HH/Mo.
1,349
86
59
16
20
161
4,500
6,000
2,000
5,000
10,000
Livestock Breeding
83
Pension
Social Benefits
Money from abroad
Money from PH
Temporal Job
Trade Activities
Service Provision
Production Activities
Agriculture Production
Others
Sources
Education
#
196
Median
1,500
Mean HH/month
1,148
1,554
1,422
129
402
6,466
Business
House rental
Medical
Food
Utilities
149
125
179
246
227
5,000
75
500
3,000
400
2,910
37
350
2,883
355
5,000
1,667
Transport
205
500
400
6
24
30
33
5,800
1,300
5,000
3,000
140
125
602
398
Leisure
Loan
Miscellaneous
137
132
125
750
1,300
450
401
670
220
800
13
Table 13 URBAN Household Income and Expenditures
Household Income URBAN

Sources
Permanent Job
Temporal Job
Trade Activities
Service Provision
Production Activities
Agriculture Production
Livestock Breeding
Pension
Social Benefits
Money from abroad
Money from PH
Others
Household Expenditure URBAN
68
93
34
Median
7,000
4,000
4,500
Mean HH/Mo
2,300
1,797
739
26
10
0
0
11
15
27
29
1
4,750
7,250
0
0
4,750
1,000
5,000
2,000
2,000
597
350
0
0
252
72
652
280
10
Sources
Education
Business
House rental
#
188
124
114
Median
1,000
2,500
450
Mean HH/Mo.
817
1,348
223
Medical
Food
Utilities
Transport
Leisure
Loan
Miscellaneous
151
224
206
160
113
114
114
500
2,350
300
500
200
1,000
100
328
2,289
269
348
98
496
50
More revealing for understanding the different exposures is to distinguish between (typical) farming and
(typical) non-farming households. Overall, the former display a higher income and higher expenditures
than the latter. When comparing the different categories it becomes clear that the main part of income
is generated through farming, that is around P10000 per month, or P50000 per main harvest.
The numbers from the survey are in line with those reported during the FGDs and in the database of the
BAS. At the same time, farmers have higher business expenditures because they have to invest several
thousand pesos twice a year to buy inputs. In general, farming households have more family members,
which justify higher expenses for food, education, utilities and transport. Throughout the provinces, the
data for farming households displays a stable gap between monthly income and monthly expenditures.
29
March 31, 2010
Given the fact that leftovers at the end of the month were smaller than the gap (below P1000) and
similar for farmers and non-farmers, we could think of two alternative explanations: First, income for
farmers varies significantly throughout the year and this makes it difficult for the respondent to report
an average value per month; second, respondents tend to report normal, or expected incomes. In
reality, however, harvest income might be lower due to the impact of natural catastrophes.
Looking at the distribution of income throughout the year, one realizes that the interactions between
different income groups are more complex. The communities / areas visited are largely agriculture
based communities and the local economy is greatly dependent on the agriculture sectors
performance. Good harvest results to more economic activities in the area benefiting not only the
farmers and traders, but also local entrepreneurs and residents who profit from the increased spending
and consumption of various goods and services.
Cash flow is high during and in the month following harvest season and low during the planting season.
Planting seasons vary slightly from each province visited depending on the weather patterns. Farmers
do land preparation and planting during the rainy season, commonly during the months of December,
January to February and June to August.
Cash flow patterns of farming communities are the same across all the provinces visited. There is
increased spending during harvest months when cash flow is high and lesser spending as farmers wait
for harvest season. During harvest season, farmers are able to spend more for basic goods such as food.
For example, the type of dietary intake is different as they tend to spend more for meat products during
high-income months compared with low-income periods.
Micro-entrepreneurs in town centers or market areas had more stable income during the year. These
types of participants had high incomes during non-harvest season as farmers buy items to trade in their
community such as vegetables, basic goods, and even rice. But income is higher when farming
communities start to spend for more non-essential goods during harvest season.
30
March 31, 2010
These general findings might be illustrated by income patterns of the province of Iloilo.
Table 14 Household Income Patterns, ILOILO
Household Income Patters ILOILO Province
Farming Households (including Livestock)
Non-Farming Households
Livestock
Jan
Most
income
10%
Less
Income
5%
Highest
Expenditure
5%
Most
income
8%
Less
Income
4%
Highest
Expenditure
7%
Most
income
4%
Less
Income
6%
Highest
Expenditure
5%
Feb
3%
6%
4%
5%
3%
3%
6%
2%
9%
March
5%
13%
6%
5%
5%
6%
2%
2%
5%
April
1%
10%
7%
8%
8%
2%
4%
12%
2%
May
2%
9%
7%
5%
6%
11%
18%
10%
9%
June
3%
10%
14%
3%
12%
19%
2%
18%
20%
July
4%
10%
8%
2%
16%
9%
0%
16%
16%
Aug
3%
25%
6%
3%
27%
4%
2%
20%
9%
Sept
15%
6%
4%
5%
9%
1%
14%
6%
0%
Oct
13%
1%
4%
10%
3%
3%
6%
2%
0%
Nov
12%
1%
3%
10%
0%
5%
10%
0%
2%
Dec
24%
0%
29%
31%
2%
28%
24%
0%
20%
None
5%
5%
4%
6%
4%
4%
6%
6%
2%
Iloilo displays two pronounced climate seasons, reflected in the income patterns. During the wet season
from September to January/February farmers can plant and harvest simultaneously with potentially up
to three harvests. The rest of the year, the weather is very dry and only a few vegetables can be
cultivated. The income of farmers is correspondingly distributed with high incomes during harvest
season and low incomes during hot season. Non-farming households, however, display a more stable
income pattern. Only three months are clearly identified as high-income months from October to
December. These households generate income through second-round effects via higher demand from
farming households. This might explain the time lag of one month with respect to farming households.
In addition, the month of December is quoted by one third of the non-farming population as a high
income-month. Discussions revealed that this is partly due to higher demand during Christmas season
and partly cause by end of the year bonuses for employees.
Vulnerability to natcat
People in rural areas undergo strong seasonal income fluctuations. This asks for smoothening measures.
Most of them were only able to cope with seasonal fluctuations by relying on external financing.
Informal moneylenders are still a very popular income source and their tight payment schedules make
their clients very vulnerable to unforeseen events. Their money is particularly used for consumption
smoothening and businesses with daily turnovers. Those having access to formal sources felt somewhat
less vulnerable to seasonal income fluctuations because of longer repayment schedules.
31
March 31, 2010
Farmers belong clearly to the most vulnerable group, as they need high amounts of capital to invest in
their business and they are expose very volatile income patterns. This makes them less attractive clients
for MFIs and they have troubles to access formal loans. It is usual for them to approach their traders for
input loans. During the FGDs, most farmers affirmed that they have entered a debt cycle, where they
use the harvest returns to pay for the inputs of the same or earlier harvests. Therefore, they are highly
vulnerable to failed harvests.
People with income sources that are not directly linked to agricultural production experience a more
stable income throughout the year (e.g. traders, vendors, and fisher folks in some areas). They manage
to smooth out their remaining fluctuations stemming from secondary market effects on a more
sustainable way by using savings, especially those with access to saving accounts.
To measure the vulnerability of the respondents, one might refer first to their endowments. The tables
above show that the food expenditures are around P2800 per month per household. Given an average
household size of slightly less than 4 members, this number corresponds approximately to the food
threshold in the Philippines (between P9000 and P10000 per capita per year). Similarly, the amount of
expenditures (excluding business investments) is about P16500 per capita per year. These numbers are
more or less the same across all four provincial subsamples, even though in Leyte the number reaches
P26000. As a result, one can conclude that most of the interviewed households and the participants of
the FGDs belong to the low-income sector (class C, D and E). Their lack of financial means might result in
a lack of flexibility (e.g. above one third of the peoples gross income is spent on food and is therefore
not available for other expenses) and capacities to deal with strong impacts on their lives. Some of the
visited communities were clearly marginalized being deprived of stable electricity and water supply.
Our dynamic exposure analysis revealed that households face important fluctuations in their income
throughout the year. At the same time, nearly all households report variations in their expenditures as
well. These are more or less the same across different household types and provinces. The new school
year starting around June results in high expenses for tuition fees, new uniforms and schoolbooks.
Christmas entails high costs as well. The vulnerability of the households towards these events can be
determined from possible mismatches of high-income and high-expenditure months. In Iloilo, the start
of the new school year falls in the middle of the low-income season, therefore having a big impact on
the households financial stability. The question arises how the households are able to cope with these
seasonal fluctuations and whether these mechanisms are sustainable or fragile.
Risks Coping Mechanisms
Risks coping mechanisms include:
Coping mechanisms among the FGD participants are the

Borrowings from MFIs, loan sharks
and relatives/friends;
same across all provinces, but were somewhat dependent
Reduce spending including on food
on whether a household member was an active
and education; and
member/client of MFIs/cooperatives. In all visited areas it
Engage in alternative source of
is common practice to seek for alternative income sources
livelihood and temporary jobs.
or livelihood. Women usually engage in small variety

stores, in trading activities or food peddling. Men look for employments as construction worker,
32
March 31, 2010
carpenter or tricycle/pedicab driver. Other coping mechanisms noted were to plant vegetables and root
crops with faster gestation periods and to sell these crops to the market or to other locals in the area.
Finally, some migrate to Manila during low-income months to work there and send money back home.
These affirmations correspond to the figures from the household survey, saying that roughly one
quarter of overall income is generated through temporary jobs.
Most of the discussants reported that they finance these alternative income sources through borrowing
money; only few could rely on savings. Those having no access to formal sources approach loan sharks
to finance their business. For instance, vendors in Abuyog, Leyte, reported that they took small loans to
buy vegetables early in the morning, sell these throughout the day and pay back their loan in the
evening. They have troubles to fulfil the requirements of MFIs and cooperatives and declare that
informal moneylenders are the best source to get quick money. On the other hand, those being
members of cooperatives or clients of MFIs usually prefer this formal source because loan sharks usually
ask for daily payments. The members affirm that their business investments take time to generate
benefits and therefore, such repayment schedules appear impossible for them.
Farmers have generally more troubles to obtain loans from formal sources. For them, an alternative
credit source is the rice trader who extends loans to the farmers through farm inputs and that are to be
paid back during the harvest season in the form of farm outputs. All participants reported to take loans
from neighbours or friends in order to finance their alternative income sources. This constitutes a very
important source for them.
Credits are not only taken for business investments, but also for direct consumption. However, most
MFIs do not offer consumption loans. These loans for consumption smoothing are generally taken from
informal money sources.
Another way to cope with income volatilities is by reducing expenditures. This includes lowering food
spending by lessen food intake or changing the dietary quality during seasons of low income. For
instance, during hot seasons, the people reduce their consumption of rice and eat other vegetables
instead. This behaviour could be observed in nearly all groups, independent of their income class.
Savings is seldom mentioned in the groups as a means to cope with the decrease in income. When
asked why they do not include savings as a means to prepare for low-income periods, a common answer
from all groups interviewed was that money is not enough even for food. Those who manage to save
will also use up cash immediately either to pay debt amortizations or to be used to purchase basic
necessities.
Cooperative leaders reported that they had difficulties to enforce mandatory savings because members
always sought for ways to get access to their money. This has also a significant impact on the
cooperatives capital. At least leaders of two of the visited cooperatives declared having troubles to
accumulate enough capital during low-income months in order to issue loans. Those who have access to
formal sources and do not undergo big income fluctuations use more frequently savings and refrain
from taking pure consumption loans.
33
March 31, 2010
Savings practices come in other forms for those living in rural areas. Excess income is invested in
livestock (hog, poultry, and goat) which the people sell usually during the start of the school year or
when money is needed. This can also be observed in our income table for Iloilo (and other provinces as
well). Households that engage in livestock breeding manage to have their animals ready for selling
before / during high-expenditure months.
6.2 Risks and Specific Vulnerability

The exposure estimates help us to understand what is at stake if a natcat occurs. The general
vulnerability assessment gives us an idea on how good different groups presumably are in absorbing
shocks. Now, we address the question of hazards and their impact structure through the following
analytical process:
1. We compare the impact of natural hazards to life-cycle events and average income to understand
the relative importance of the former. For instance, even though the reported damage might be low
it gains in importance when expressing it in number of income months.
2. We analyze the three major natural hazards typhoons, floods and drought across the two major
different economic sectors and across the four provinces. This helps us to understand whether some
jobs are more vulnerable to specific risks than others. We try to figure out whether the expectations
from our prior data analysis, that hazards are unequally distributed across the Philippines, match
with the households perception.
3. We address the topic of risk management systems that people developed (or not) to protect
themselves against the impact of specific natural calamities.
Natcats are a #1 risk for poor households. They are very frequent events and entail large costs,
especially for the agricultural sector. Comparable to illness in affecting a large part of the population,
they are generally considered as having a bigger impact on the households budget. Many of those being
affect declare that they suffer at least once a year from a specific natcat. This is especially true for
marginalized and very poor households living in areas where appropriate risk preparedness measures by
government units are inexistent. More severe events happen every ten to 15 years.
The major hazards are typhoons, floods and drought with droughts generally causing the highest
damage. For all these three hazards, farmers feel more at risk and incur generally three times higher
losses than non-farming households. In particular, non-farming households feel barely risk-prone to
droughts. This differentiation is explained by the fact that direct damage to households is very rare, but
that farmers may lose large parts of their crops. Non-farming households suffer more from secondary
effects through higher food prices and lower demand for their products (if they are not employed and
receive a fixed salary).
Iloilo is prone to typhoons, floods and drought, but the impact is more moderate than in other
provinces. Drought plays an important role for farmers and fisher folks, whereas the residents in Iloilo
City suffer from annual floods. A flood control project, however, shall solve this problem for the
provincial capital this year.
34
March 31, 2010
In Cagayan, especially typhoons, but also floods and drought affect large part of the population, with
damages higher than in other provinces. The yield of farmers first harvest is generally threatened by
long dry spell, whereas typhoons destroy big amounts of the second harvest. At the same time, the
province is also focus point of risk mitigation and relief measures of the government and donor
organizations. Leyte is prone to floods caused by continuous rainfall and/or typhoons, as well as
landslides. People feel extremely at risk of these hazards, comparable to the situation in Cagayan.
In Agusan del Sur, low-lying areas near the Agusan River are frequently flooded, damaging especially
farmers crops. These floods are triggered by moderate, but steady rainfall.
State players have barely developed any capacities to mitigate risks in the provinces in such a way that
people feel unprepared and abandoned. Whereas, seasonal climate forecasts and irrigation system help
some people to a certain extent to cope with droughts. Floods and typhoons hit most communities with
little warning and preparation. Most people manage the impact of natcats by borrowing money from
friends, relatives or neighbours and to a lesser extent via savings. Formalized systems, such as insurance
schemes or organized relief programs are rarely in place and are mostly considered as less effective. At
the same time, the impact of natcats exceeds the capacities of these informal risk-sharing mechanisms,
leaving people with major problems in repaying their loans.
Table 15 Frequent Hazards and Cost
Frequent Hazards and Corresponding Cost

What are the events that affect your household in the last 3 years?
Type of Hazards
%
Average Occurrence
Per Year
Childbirth
33%
1.3
Baptism
Schooling
Wedding
Fiesta
Illness
Accident
Funeral
Typhoon
Floods
Drought
7%
7%
59%
49%
20%
Median Cost
5,618
2,000
1.2
3,546
2,000
2.8
1.1
2.6
11,074
20,726
6,197
2ND 2.9
9,629
3,000
1.3
1.2
39,931
16,253
5,000
ST
1 15,000
1ST 3.1
17,496
5,000
25%
52%
12%
51%
40%
Average Cost
RD
2.3
11,566
2.7
17,891
ND
2,500
10,000
3,000
5,000
ND
10,000
The HH survey shows that natural catastrophes are part of the respondents life. Typhoons are the most
frequent event for the four provinces taken together. They affected 60% of the households in the last
three years and happen on average once a year. Floods (except typhoons) are also a very common
disaster affecting half of the sample. There are only two life-cycle events affecting more or less the same
number of households: More than 50% of the households report fiestas and schooling as events that
have affected their households recently. Illnesses and childbirth are a little bit less common. Droughts
only affected 20% of the sample.
35
March 31, 2010
The data on the strength of the impact, expressed in Pesos, shows that funerals, weddings and drought
entail the largest costs, but they are also clearly less frequent than other events. Schooling and
especially fiestas have a more moderate impact on the peoples budget than typhoons, floods or
drought. The typical respondent household looses P5000 every year either to the impact of floods or
typhoons. Given that the average costs are clearly above the median one can conclude that the cost
distribution is highly skewed with some experiencing losses plainly above P20000. These numbers
compare to typically one to two income months, showing the strength of the impact.
Figure 2 Financial Pressures of Households
Financial Pressures of Households

Baptism
Wedding
Fiesta
Childbirth
Schooling
Accident
Illness
Typhoon
Drought
Floods
Funeral
Scale 1-very small,

2-small, 3-neither,
4-big, 5-very big
1.0
2.0
3.0
4.0
5.0
When asked for the financial pressure on the household, one obtains some deviations from the impact
expressed in Pesos. Events associated with life or happiness (such as childbirth, wedding, fiesta) have a
lower impact than sad calamities (especially funerals, but also illness and all natural calamities).
These figures correspond to the answers during the FGDs, even though participants did not mention
happy events as big risks. Illness in the family, natural disasters, education spending, and accidents are
the common events or occasions that affect family income across all the groups interviewed. Family
cash flow is heavily affected whenever these events happen.
Poor and marginalized communities identified as their major concern the supply of water and food
during wet season when storms and floods make it difficult to reach them. When asked for the
frequency and impact structure one could notice a slight distinct picture. Illness and education were
mentioned as having the most frequent and for some even biggest impact on the peoples livelihood.
Other agriculture-related events were also mentioned, such as pest and death of livestock. In many
discussions, natcats were declared as having the biggest impact.
36
March 31, 2010
Table 16 Frequency of Natcat Occurrence
Frequency of Natcat (Number of responses)

never
Typhoon
Floods
Drought
lifetime
133
113
38
126
182
273
Frequency of Occurrence
ten yrs
2-5 yrs
8
25
13
40
8
21
annually
125
69
59
several times
48
37
15
The frequency patterns of the three major natcats - typhoons, floods and droughts - reveal that the
typical recurrence period is one year. Those affected by natcats experience them typically very often
and only a few respondents declared being affected regularly, but less than once a year. According to
10% of the respondents especially typhoons might even affect their household several times a year.
These high frequency numbers might be at odds with the general perception of natural calamities as
being a somewhat unexpected event that is not part of the regular, seasonal weather fluctuations. For
instance, the distinction between normal dry season and droughts was not that clear to some of the
FGD participants. In Zarraga, Iloilo, the respondents affirmed that droughts affect them every year, and
the impact has increased in recent years.
When asked about natural calamities that have had high impact on the family over the past ten years,
most groups could only remember the most recent calamities. However, when asked about when such
event with a similar or higher magnitude of destruction occurred, they could recall events dating way
back over twenty years or so.
As emphasized above, farming and non-farming households have different exposures and different
general vulnerability towards exogenous events. This was justified by the fact that farmers need high
investments and have long income turn over periods thereby creating strong fluctuations that might
easily be exacerbated by the impact of natcats. The next table helps in figuring out whether farmers
also have different risk perception regarding different natcats.
Table 17 Risk Proneness for Farming and Non-farming Households
Farming HH
not
Typhoon
Floods
Drought
Non-farming HH
Typhoon
Floods
Drought
little
23%
34%
48%
not
more or less
extremely
13%
12%
15%
20%
14%
11%
24%
25%
13%
16%
10%
3%
16%
17%
7%
more or less
19%
14%
3%
strongly
15%
16%
2%
Extremely
9%
7%
1%
little
40%
43%
72%
Strongly
The table reveals two important findings: First, farmers are more affected by natural catastrophes than
non-farming households. Second, non-farming households feel barely risk-prone to droughts. This
37
March 31, 2010
pattern holds across all provinces. In other word, typhoons and floods affect everybody, but particularly
farmers; droughts affect essentially only farming households.
For each of the three hazards, the gap in risk perception between farming and non-farming households
is around 15 percentage points, when considering those reporting to be strongly or extremely at risk.
This first result is in line with our former findings, emphasizing the high exposure and high general
vulnerability of farmers. They have simply more at stake and in addition, crops are especially vulnerable
to extreme weather events, particularly during the reproductive stage. Floods and typhoons affect
farmers in two ways. Besides the destruction of their harvest, they suffer considerable losses from
floods because the remaining crop is of lower quality and they obtain lower price when selling it.
Another common concern for farmers among all provinces includes pest & infestation.
At the same time, around 25% of the non-farming households feel at high risk of typhoons or floods.
This number is in line with observations gathered during FGD. Depending on the income source and the
location of the homes the discussants claimed to be more or less affected by these hazards. When asked
for the impact of typhoons and floods FGD participants living in risk-prone areas (near the riverside)
generally answer that everything is submerged and flooded for several days. But few report substantial
damages to their houses, such as roofs blown away. Natural calamities that would affect their homes
directly are not very frequent. Except for floods, the participants have rarely experienced extreme
natural calamities that have destroyed completely their homes or have resulted to losses of life in the
family. The impact of typhoons, floods and particularly drought is more indirect. Those running stores or
engage in trading suffer more from less demand for their products and higher expenditures for food as
prices increase. But those with fix salaries (e.g. Barangay officials) experience only the latter effect. This
difference in risk perception is also represented in the median cost that people attach to the three
calamities:
Table 18 Natcat Costs to Households
Cost of Major Natcat Events

Farming HHs
Typhoon
Flood
Drought
Non-farming HHs
Typhoon
Flood
Drought
Average
24,055
15,647
20,789
Average
7,998
5,954
4,125
Median
#
8,000
5,000
10,000
Median
84
66
38
#
2,000
2,000
3'500
58
48
8
In case of natural disasters farmers incur three times higher losses than non-farming households.
Droughts are very severe and costly events for farmers. These numbers are in line with those gathered
during the FGD. When asked how much loss do farmers incur in the event of flooding, the common
estimate provided is around P15000 per hectare of land. However, severe droughts can destroy up to
70%-80% of the crop that is around P35000 per hectare. Consequently, the whole community suffers
from losses. Household asset damage estimate their losses up to P20000 for fixing damaged roofs, for
instance.
38
March 31, 2010
Drought is of less importance for the visited areas. Even in El Nio years there is still rainfall that can be
observed in selected areas of the province. Two thirds of those feeling at risk of droughts state that this
is because of the strong impact and not because of the short recurrence period.
Even though respondents in all provinces shared the common concern that natcats have a big and
frequent impact on their familys lives, comparable or even greater than those caused by lifecycleevents, the four areas display different risk maps.
Figure 3 Perception on Natcat Impact to Households Pre selected provinces
Perception on Natcat Impact to Households - 'High/Extreme' category
Drought
Agusan DS
Leyte
Flood 2
Cagayan
Iloilo
Typhoon1
0%
10%
20%
30%
40%
50%
60%
70%
Question 5.1.7: How risk-prone is your household to the following natural calamities?
Categories of responses: 1 at no risk at all; 2 at little risk; 3 at medium risk; 4 at high risk;
5 at extremely high risk.
The perception of the respondents to the impact of the 3 major natcat events was measured in a scale
of 1 to 5. 1 as no risk, 2 little risk, 3 medium, 4 high and 5 as extreme risk. Figure 2 capture the
responses in the medium-high-extreme risks of the scale. Leyte and Cagayan are more risk-prone to
typhoons and floods. Agusan del Sur and Iloilo are affected mostly by flood. Drought has the least
impact across all areas because its occurrence is less frequent than the other natcat. Drought however
provides the biggest cost to farming HHs in a single event.
Iloilo:
According to the crop damage report from BAS, Iloilo is more frequently and severely affected by
droughts and typhoons. However, most of the survey respondents declare that their household is more
affected by typhoons and floods than by drought. This can partly be explained by the fact that the
number of non-farming households is disproportionally high in this subsample. But even among the
farming households barely 10% feel at risk of droughts.
39
March 31, 2010
This number challenges both the statistics from BAS and the results from the FGDs. Four discussions
were conducted in Dumangas and one in Zarraga, a neighboring community on the way to Iloilo City.
Most participants relied, at least partly, on farming activities, but had generally a second activity, such as
microenterprises or barangay official. When asked for the risks with the strongest impact the common
answer was drought as this affects the entire community and makes other income earning opportunities
scarce as well.
Typhoon Frank hit Iloilo in 2008, causing a lot of damage and even casualties. Therefore, the question
how the group was affected by this big event rose quickly. Most discussants could remember the big
impact of this typhoon, but did not forget to mention the drought in the consecutive year as being at
least similarly severe.
Figure 4 Perception on natcat impact to households - ILOILO Province
Perception on Natcat Impact to HH - ILOILO Province

high/extreme
Drought
Floods
medium
Typhoon
no/little risk
0%
20%
40%
60%
80%
100%
The survey results indicate that about every fifth respondent feels highly or extremely at risk of
typhoons and floods. Compared to other provinces the impact is more moderate and damage estimates
are lower. In addition, 75% of all respondents declare that they are hit less than once in a lifetime.
People living in Iloilo City usually say that they encounter flooding and typhoons more frequently, but
the impact is also lower than in the more rural municipalities of Dumangas and Zarraga. As a matter of
fact, Iloilo City (and its outlying areas), is vulnerable to large-scale flooding disasters frequently during
the rainy season. According to the survey respondents these calamities take place nearly every year.
Discussions with the municipal planning officer revealed that reasons for this are the citys location at
the mouth of several rivers and the fact that unfavourable city planning structures, such as illegal
settlement, construction and encroachments, reinforce the devastating effects of the natural hazards.
Cagayan:
According to our first data screening at the beginning of this study Cagayan is one of the most risk-prone
areas in the Philippines and clearly more at risk than the other three provinces. These results are
confirmed by the household survey and the FGDs.
40
March 31, 2010
Figure 5 Perception on natcat impact to households - CAGAYAN
Perception on Natcat Impact to HH - CAGAYAN Province

high/extreme
Drought
medium
Floods
Typhoon
no/little risk
0%
10%
20%
30%
40%
50%
60%
70%
Especially typhoons are identified as very risky, affecting nearly the whole sample (more than 95%).
More than 60% of our sample feels at high or extremely risk of typhoons, whereas this number is around
25% for floods and drought. Compared to other provinces the cost estimates are also slightly higher,
especially for typhoons and drought, and even for non-farming households being around a median value
of P3000 to P4000.
In line with BAS statistics the survey respondents confirm that typhoons and drought affect them
annually. Typhoons (droughts) hit nearly 90% (50%) of the sample at least once a year. An FGD
participant sketched a typical Cagayan (agro-)year as follows: The first (dry season) harvest in February
to April has low yields due to droughts and the second (wet season) harvest in September to October is
even worse due to several typhoons devastating the crop. Some of the farmers in the community of
Solana, one of the municipalities with the highest crop yields in Cagayan, even report that the second
harvest months are low-income months because part of their harvests are destroyed by typhoons.
The four visited municipalities have slightly different hazard profiles. The Cagayan River is the largest
and longest river in the Philippines and is subjective to extensive flooding during the wet season from
May to October. This is caused by rainfall in the southern mountains where the rivers headwaters lie
(mainly in the province of Isabela). As a consequence, cities located at the riverbanks of the Cagayan
River, such as all visited areas (Tuguegarao, Solana, Alcala and Aparri), are highly susceptible to flooding.
For instance, the urban part of the municipality of Tuguegarao is surrounded big farming areas that are
highly susceptible to flooding, as is a small fraction in the south of the city itself as well.
All four municipalities are also prone to typhoons. FGD participants could all remember the devastating
effects of typhoons Pepeng, Ondoy and Ramil that hit the province in 2009. When asked as to when a
similar event occurred, the group in Solana mentioned that something similar happened in the 1970s.
Over the past ten years, it was in 2005 and 2006 that th experienced a very strong typhoon, but it was
not as destructive as that of 2009. The municipality of Aparri, lying at the mouth of Cagayan River, is
divided in two, with this broad river in-between. Whereas the town center on the eastern shore is well
developed, the western part is mostly populated by fisherfolk, roads are inexistent and electricity supply
is only temporary. When asked these fishermen how natural hazards affect them they answered that
41
March 31, 2010
strong winds make it impossible for them to go out fishing and during typhoon seasons they are
completely cut from the town center, resulting in interruptions of food and water supply. In addition,
their wood huts are easily blown away.
Leyte:
The province of Leyte is threatened by yearly occurring floods following heavy rains, often associated
with typhoons. The main period for typhoons and floods is September to January, that is before, during
and after harvest time. Droughts rarely occur and are seldom recognized as risky events.
Figure 6 Perception on natcat impact to households - LEYTE province
Perception on Natcat Impact to HH - LEYTE Province

high/extreme
Drought
Floods
medium
Typhoon
no/little risk
0%
20%
40%
60%
80%
100%
People in Leyte perceive risks as being stronger than as the crop damage report data suggests. Impact
scores are comparable to those of Cagayan and they are even higher for floods. This holds true even
when considering the high fraction of farmers in the subsample. In addition, nearly 20% of the
respondents feel at high risk of landslides, making this hazard more risky than droughts in this province.
One third of the respondents declare to be affected at least every year by a typhoon. At the same time,
most of the FGD discussants stated that typhoons are probably going more north due to climate change,
thereby letting Leyte unaffected in coming years. Strong floods occur less frequently than typhoons and
are smaller in its spatial outreach. In accordance with the higher income rates and more valuable assets
that the respondents in Leyte reported the usual damage of the natural calamities is also higher than in
other provinces.
Extreme events that make losses even to those that are not directly dependent on the agricultural
production are quite rare in Leyte. The vendors in Ormoc City remembered well the flash flood of 1991,
which left nearly everybody affected, and a smaller one in 1995. Those living in protected homes on the
hills suffered from damages to their businesses because they are generally located in the center of
Ormoc City, near the water. Another major event hitting the province was a seven months drought in
the 1980s. Leyte is also known for being prone to landslides, happening especially in the southern part
of the island.
Floods occur annually in Leyte, but they do not affect everybody and are not always associated with
typhoons. When visiting a marginalized barangay of Baybay, located more to the hinterlands, the FGD
participants emphasized that they suffer harvest losses every year because of heavy rainfall in the
42
March 31, 2010
mountains. Even though it barely rains in the barangay itself the water coming from the mountain is so
strong that it destroys part of the harvest. This type of floods is not expected to change in the coming
years
Agusan del Sur:
In accordance with our prior data analysis, Agusan del Sur is generally less risk-prone than other areas.
The most critical hazard is flooding with about 25% of the respondents being at high or extremely high
risk. Droughts are also a concern for only about 30% of the farmers in the sample, but even though
these say that they are of less importance to them than floods, the estimated damage for droughts is
nearly twice as high as that for floods. Typhoons do practically not occur. Even though many people
expressed the concern of floods, those having no farms had difficulties to design a value to their
incurred losses because those are more of an indirect character. In the visited municipalities of Bayugan,
Trento and San Francisco damage to houses is very rare because they are located in higher areas,
whereas the farms are built up near the riverbanks.
Figure 7 Perception of natcat impact to households - AGUSAN del Sur Province
Perception of Natcat Impact to HH - AGUSAN DS Province
high/extreme
Drought
Floods
medium
Typhoon
no/little risk
0%
20%
40%
60%
80%
100%
Floods are usually caused by moderate, but continuous rainfall, leading to overflowing of the provinces
main river, the Agusan River. Even though these floods happen every year they differ in intensity. People
usually refer to the years 1984, 2006 and recently January 2010 when asked about severe floods in the
area. But the worst was in 1984 where houses and farms were destroyed, livestock were lost, and
several people died.
6.3 Risk Preparedness

Risk preparedness is insufficient in most areas. As a result of the lack of appropriate infrastructure or risk
mitigation plans offered by local government units natcats affect families and their communities very
frequently.
Natural hazards are unequally distributed across the four visited provinces with people in Cagayan and
Leyte feeling more at risk than in Agusan del Sur and Iloilo. Besides, natcats occur very often, most of
43
March 31, 2010
them annually. When asked whether they know of any action taken by the government or institutions to
protect them from the impact of natcats, the general answer across all four provinces is a little. Most of
the people feel vulnerable, as they have not developed sufficient capacities to adapt disasters.
In Cagayan, the FGD participants mentioned that they felt better prepared for droughts than for
typhoons. When PAGASA forecasts a long dry spell, the government and private operators try to store
water in their water reservoirs. Especially those areas where irrigation systems are in place farmers feel
less prone to drought. However, most of the places that have been visited lack accessible water sources
in a sense that those provided by the National Irrigation Association (NIA) are often not affordable for all
farmers. Only some communities have developed local irrigation systems that are shared among
community members. In other areas individual efforts prevail, that is to say farmers make use of water
pumps and deep wheels to get water from the ground. Anticipating a lack of water, farmers change their
cropping. They cultivate vegetables that are more drought resistant. That helps them to dampen the
impact of severe droughts. However, not all groups were aware of seasonal weather forecasts and had
troubles to prepare in time.
Given their sudden character typhoons and floods are perceived as events that let the people
unprepared. Especially the marginalized and poor people feel not at all prepared and left abandoned by
the government. Preparation is rarely organized and is more of an individual, spontaneous character.
Typhoon warnings reach those people who have a TV generally one week before the impact and
barangay officials try to disseminate the warnings via mouth-to-mouth propaganda. Preparation of
floods usually begins when steady rainfall is observed. On the one hand this gives the inhabitants
enough time to prepare their houses, store some food and evacuate livestock. People in Cagayan even
declared that local governments typically organize surveys in this week to check whether households
engage in necessary preparation measures. On the other hand, crops, that is to say the most valuable
assets for farmers, cannot be saved.
The groups affected by floods and typhoons were asked if they knew of any actions being taken to help
reduce the risk, but the common response to this query is that they are unaware of any actions being
undertaken by both the local community leaders and the local government units. The group in Baybay,
Leyte for example, explained that a simple dike could already help reduce the flooding in their area, but
they sadly noted that their local government has taken no action over these years. On the other hand,
some major cities have developed projects to dampen the impact of floods. For instance, Ormoc City has
developed a disaster plan for flood-prone areas after the flashflood in 1991, including risk mitigation
mechanisms. The construction of dikes and the widening of the river basin shall help to make the city
less vulnerable to floods. Similarly, in Iloilo City the Flood Control Project shall offer a long-term solution
to the perennial flooding in the city and outlying areas. The project, that includes construction of flood
ways and bridges, as well as education campaigns and resettlement of affected areas, shall be
completed in 2010.
44
March 31, 2010
Figure 8 Natcat Coping Mechanisms
Risk Coping Mechanisms
Household Risk Coping Mechanisms

Goverment
Natcats
Claims
Sold Assets
Foreseeable
risk events
Reduce Coonsumption
Unforeseeabl
e risk events
Lender/MFI
Savings
Friend
0%
5%
10% 15% 20% 25% 30% 35% 40% 45% 50% 55%
Natcat risk events include: typhoons, floods and drought.

Foreseeable risk events include: childbirth, baptism, schooling, wedding, fiesta.
Unforeseeable risk events include: illness, accident, funeral.
Coping mechanisms after the impact of a hazard are essentially the same as those used to smoothen
seasonal fluctuations. Borrowing money especially from friends and relatives is the most prominent
coping mechanism as indicated by over 60% of the responses around 13% of which gets credit from
lenders/MFIs. Savings is the 2nd coping mechanism (25%) followed by reducing consumption (5%) and
selling household assets (2%). Four (4) of the 264 responses said insurance claim is one of his typhoon
coping mechanism. The same picture of coping mechanisms is also true for other risk events like
accident, illness and funeral.
Even though most of the respondents have access to formal finance sources, borrowing from friends
and relatives is still more prominent. This can be explained by the fact that many MFIs are reluctant to
disburse emergency loans because they are usually not invested in businesses. Alternatively, friends and
relatives ask generally for lower interest rates (these zero-interest loans go along with the expectation
that credits with similar conditions are given to the lender when she is in need). The FGD participants
declared that most of them have relatives working at least temporarily in Manila. Still, it should be
mentioned that FGDs with members of cooperatives or clients of MFIs revealed that the institutions
usually disburse credits, but that they are sometimes not sufficient in serving the costs.
Saving is more commonly used for foreseeable events (fiesta, wedding, baptism and childbirth), but not
so much for unforeseeable events (illness, typhoons, floods and drought; exception: schooling). In
addition, people rely generally more on savings for those events that induce lower costs. This
corresponds to FGD results. The discussants emphasized that they try to save for emergencies and that
some are successful in accumulating a small amount, but in most cases the hazard-induced costs exceed
this sum. In a way that respondents evaluate saving as a less important mechanism, borrowing from
informal moneylenders increases in importance.
45
March 31, 2010
Some people also tend more to reduce expenditures on consumption, motivated by the increase in
prices that people usually face after natcats. Besides, in case of natcats some FGD discussants remember
the distribution of money and food via the LGU calamity fund. The national food authority sells rice at
lower prices and in some places, especially in Cagayan, the farmers benefit directly from government aid
in form of free seed distribution. This takes place in proportion to the damage that each household
reports to the DA during the survey taking place one to two weeks after the impact. Some also
mentioned the good job of donor organizations that were very effective in distributing money, food,
clothes and other assets on time. All this shows that the government and donor agencies have taken
measures to help those affected by calamities, but only a small fraction of the affected is reached and
measures seem to be more sporadic than on a regular basis.
When asking how they evaluate the different coping mechanisms the survey respondents stress that
only a few mechanisms are really effective, emphasizing their vulnerability and helplessness. The
mechanisms obtaining the best scores tend to be those that are easily accessible. For instance, across all
provinces these are Borrowing from a friend, a neighbour or a relative and Savings. Most people
evaluate claims from insurance membership as a very ineffective way to cope with calamities.
Government and donor aid obtain very good results in Cagayan. This might show that measures from
these institutions have so far concentrated inter alia on this province due to its hazard-proneness. In
general, people judge the help from MFIs and cooperatives as a rather effective way in overcoming
natcat shocks, especially in Leyte.
Having troubles to repay loans after the impact of a hazard indicates how well people are able to
overcome the shock. As mentioned above, a case of illness in the family is a major hazard affecting the
households budget. Still, whereas such a shock leads for most people to some problems in repaying
their loans, the impact of typhoons and floods is clearly more severe and people have more problems to
manage this impact. This result for around 40% of those affected to major problems in repaying the
loan, and for 30% to have some problems. The respondents have fewer problems, however, in coping
with the consequences of droughts. When dividing the pool of respondents in different subsamples one
can observe that especially farmers and those living in Cagayan and Leyte encounter problems in
repaying their loans.
6.4 Financial Literacy & Insurance Design

Pricing is the most important issues for most of the groups interviewed. Most are interested to have a
natcat insurance product and that holds true across all four provinces, even though corresponding to
their specific risk profile. The affordability, however, is the most important single factor that will
determine whether a family will decide to purchase natcat insurance. Low premiums payable in
accordance with the households income schedule and high-frequent payouts make the product
appealing to most of the households.
Since there are no other offers of such kind except for crop insurance offered by PCIC, participants of
the FGDs are not very particular about the quality and features of the product. For as long as individuals
perceive the product to be affordable and that benefit is commensurate to the amount paid in
premiums, then the insurance product would be an attractive investment for them.
46
March 31, 2010
Information is also critical in successfully distributing natcat insurance. Most of the participants do have
some basic understanding about the concept of insurance. But what seems to prevent them from
availing insurance products (other than the price factor) is information where to get it and information
on how it actually works. Only one quarter of the people interviewed availed of insurance products,
especially for health and funeral pre-need plans. This subsample tends more than others to be
interested by natcat insurance products.
When not being active members of any cooperative or client of any MFI, most are indifferent concerning
distribution channels as long as those are easily accessible and somewhat part of the peoples life.
Strong outreach and a high number of clients make it attractive for others to buy the product as well.
Insurance protection is commonly understood by the FGD groups as a means of security against
unforeseen events. Policyholders are receiving some form of benefit that will help their family to
recover from incurred losses. Especially those being MFI clients or cooperative members were familiar
with the basic concept. In the HH sample around 60% declared understanding the concept of insurance.
Still, when probing deeper and asking about possible reasons why people buy insurance or how the
payout process works answers were quite varied.
Figure 9 Reasons to buy insurance
47
March 31, 2010
Figure 10 Perceived benefits from natcat insurance
What benefits from natcat insurance?

a) When contract ends, I
will get my contributions
19%
53%
28%
c) In case of calamity, I will get money from

insurance company + when contract ends, I will
get my contributions & interest
b) When contract
ends I will get
nothing. But in
case of calamity, I
will get money
from insurance
company.
Only roughly 28% of the survey respondents hold that the reason to buy insurance is to protect the
policyholder from catastrophic losses, whereas 8% more believe that it is for the protection of recently
incurred losses. Similarly, when asked for the benefits of an insurance coverage the same number of
people chose the right answer, that is to say that policyholders only receive any payouts in case of a
qualifying event.
More than half of the respondents believed in a combination of saving and insurance product; in other
words, payouts are expected for the event of a natcat and after the end of the contract period in form
of a contribution payback plus interests. This corresponds to incidences in FGD where people frequently
asked whether they got any payout if there was no qualifying event. Surprisingly, neither those saying
that they understand the concept of insurance, nor those actually availing of insurance display a higher
probability in giving the right answer to the two questions.
Although it seems that the groups interviewed understood the concept of insurance, some still consider
insurance as an additional expenditure for the family and premium payments are a form of expense,
which is not necessary or not a priority, especially in times when incomes are low. As a matter of fact,
insurance is seldom mentioned as a means of protection against unforeseen events. Individuals will not
subscribe to insurance unless it is part of the loan availed by the individual or if someone has been able
to explain to them the benefits it would provide them. Some avail of PhilHealth cards distributed
through local government units while there are a few who avail of burial plans offered by private preneed companies, such as St. Peters.
In the HH survey sample only one out of four avails of insurance (25%), mostly health (PhilHealth) and
life (St. Peters Life Plan). Some of these products offer very rewarding leverages. For instance, some
availing of Philihealth insurance mentioned that they paid an annual contribution of P180 and benefits
include free consultation and hospitalization. The Red Cross accident insurance is also popular and is
48
March 31, 2010
available for an annual premium of P100. Payouts in case of accidents can go up to P20000. Still, private
companies, such as St. Peter, are also successful in marketing their products. Premiums are obviously
higher and ask for a payment of P550 per month during five years. Even apparently poorer people were
willing to pay that sum, arguing that they do not want to let their children worry about funeral
expenses.
The participants tend to avail of these products because they have knowledge of it or have been
referred to it by neighbours or friends or it has been thoroughly explained to them by insurance agents.
Without this information, they would not intentionally seek for or purchase insurance on their own. In
addition to little awareness, many people are also reluctant to buy an insurance cover for moral reasons.
A common argument heard was that preparing for a disaster implied to a certain extent to look forward
to the event to happen in order to collect the benefits. According to one FGD participant, that is against
Gods will.
However, the fact of being insured seems to alter the policyholders perception of risks, evaluating
covered risks as resulting in less financial pressure. For instance, those availing of health insurance
consider health problems still as a major risk, but cases of illness tend to result in less financial pressure
for the insured than for the non-insured. In discussions those benefiting of insurance coverage are
generally satisfied with the policies and stress the advantages, though adding to have difficulties in
paying regularly.
All in all, there seem to be still important gaps in questions of financial literacy. These might restrict the
demand for insurance products. It is true that understanding insurance is not a pre-requisite to have a
policy. In fact, 28% of those availing of insurance products admit that they do not have any idea about
what insurance really means. Subsidized and/or compulsory insurance products might explain this high
figure. But definitely rising peoples awareness on issues of financial risk protection should increase the
demand for insurance products. As a matter of fact, those who say that they understand insurance are
more interested in buying natcat insurance. And this is even more the case for actual policyholders.
Table 19 Demand for Insurance by Understanding and by Membership
Interest in Natcat Insurance

Those understanding what insurance is
yes
88%
Those NOT understanding what insurance is

Yes
82%
no
12%
those availing of an insurance product
yes
91%
no
9%
No
18%
those NOT availing of an insurance product
Yes
83%
No
17%
Financial literacy plays an important role in determining the demand for insurance products. People
having an idea of what insurance is and those who avail of insurance products have a bigger demand for
a natcat insurance product. But even among those who are not aware of what insurance is there are still
more than 80% interest in such a product. Taking the whole sample, 86% of the HH respondents are
interested in buying an insurance product to protect them from the impact of natcats and still 66%
would like to insure their loans.
49
March 31, 2010
The interest in natcat insurance is high in all four provinces with Cagayan and Agusan del Sur displaying
particularly high figures. The specific hazard of coverage corresponds to the identified perception of
risks as analyzed above.
In Cagayan, 80% of all households would be interested in an insurance product for typhoons. During all
FGDs in the province typhoons was the primary concern, too. The impact of drought and floods is more
specific to either certain occupations (such as farmers) or certain locations (communities without good
irrigation system; near the river) and are therefore of less demand. However, one fifth of the farmers
being interested in an insurance product in Cagayan would like to have a protection against drought.
In Iloilo, the picture looks less clear, as both typhoon and flood protection are nearly equally high in
demand. At the same time less people than in other provinces would be interested in a natcat insurance
product there and when offering a specific product (e.g. for the protection against floods) only at most
one half of the survey sample would show any interest. The FGDs revealed a somewhat different
picture. Nearly all people were interested in a drought-insurance, especially farmers and fishermen.
In Leyte, people had an interest in typhoon-related insurance products, but even protection schemes
against flooding would be appealing to nearly one half of the respondents.
Finally, Agusan del Sur displays a clear preference for flood-insurance products, especially among
farmers.
In general, there is barely any difference in interest between farming and non-farming households, but
the former are likelier to be interested in a multiple-peril insurance and have higher demand in typhoonand drought-insurance products.
Quiet surprisingly at first sight is the fact that even households reporting that they are at no risk of a
certain calamity are preponderantly interested in buying a natcat insurance product. This might be
illustrated by the demand for typhoon insurance products. About 70% of those saying not to be at risk of
typhoons are interested in such a product. This finding supports the hypothesis that secondary impact
effects play an important role in determining the demand. Still, being at risk is another important factor
(besides understanding & membership of insurance) in explaining demand.
Having a general interest in a natcat product makes people more likely to buy the product in the end,
but product features will certainly play their part in forming the demand. Insurance is still not common
practice among the respondents. It is important to realize that nearly no group identified insurance as
possible answer to mitigate the risks from calamities.
Selected groups were asked about the features or product attributes which they think are more
important. The groups identified the top three insurance product attributes:
1. amount of premium payments,
2. benefit or amount of payout received, and
3. requirements and ease of application
Not as important are ease in payout claims, frequency of payments and credibility of the provider.
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March 31, 2010
Table 20 Monthly insurance premium affordability
Amount in Philippine Peso
Monthly Insurance Premium Affordability

Over than 500
200-500
151-200
101-150
81-100
41-80
21-40
11-20
Less than 10
0%
5%
10%
15%
20%
25%
30%
Participants shared that insurance premiums should be matched with the familys ability to pay such
amount of premium. Since insurance is commonly viewed as an additional expense, the amount should
be low not more than what they are willing to spend on non-basic necessities. The timing of the
payment should also be considered and should coincide at times when they have excess cash inflow,
usually during harvest season or peak business seasons. For instance, one group of farmers asked
whether it would be possible to pay high monthly amounts during harvest season and lower amounts
during the rest of the year. But other factors, such as existing collection channels play also a role. For
example, SECDEP members in Iloilo preferred paying on a weekly basis, as they collect already insurance
premiums every Monday. In general, the premium amount should be between P80 and P500 per month
with slightly higher willingness to pay in the province of Leyte (probably due to higher income in this
subsample). Surprisingly, farming households would not be ready to pay significantly higher premiums,
though being more affected by natcats. Those not interested in natcat products often argued that they
were not able to pay the premiums, therefore emphasizing the relevance of low premiums for this
market.
Benefits are also a primary consideration. Participants in the FGD equate that the amount contributed
should more or less be proportionate to the amount of benefit that they will receive. The common
attitude of participants regarding benefits is that if a certain amount is paid, an equal or greater amount
should be received in case the insurance is paid-out (much like savings being availed only at time when it
is needed). The participants also prefer to receive payouts for calamities that occur frequently to
payouts for severe calamities that seldom occur. For them, the need is when the calamity occurs,
irrespective whether it is severe or not, since they are affected anyway in one way or the other and that
they will be needing cash to help them recover from losses. Frequent as understood by most FGD
participants means more or less every year; in some provinces like Cagayan people were declined to ask
for several payouts a year, e.g. corresponding to the number of typhoons. In the HH survey sample, 57%
of the respondents preferred frequent and low payouts to less frequent and higher payouts. Desired
payouts depend on the occupation, but should fit the damage. Farmers would like to have benefits
around P20000; others would expect an amount of about P5000.
51
March 31, 2010
When confronted with the challenge of setting up a financially sustainable product, people usually
lowered the amount of benefits instead of increasing the premiums. For instance, when asked for
different premiums, benefits and probabilities of payouts a typical answer was a P100 premium and a
sum of P1000 to be paid out on average every year. Then, however, the enthusiasm for such a product
was somewhat lower.
Participants also emphasized the need for simplified and understandable procedures and requirements.
Often, they do not completely understand the insurance policies, as they often tend to be too technical
for them. Groups usually referred to PCIC crop insurance products as counterexample (see box).
Figure 11 Challenges to PCIC crop insurance
Box: Challenges to PCIC crop insurance

Only a handful of the FGD participants and nearly none in the HH survey sample subscribed to crop insurance. Only in Cagayan farmers
were more inclined to have a PCIC policy. That is surprising because the current crop insurance program by PCIC may seem to be
sufficient to provide protection against the effects of natcats. But the FGD discussants gave various reasons why they did not avail of any
crop insurance.
The majority of the groups criticized that they have not been informed properly or have not been visited by any organization offering crop
insurance. Not all farmers interviewed have heard of PCIC and those who have do not have any knowledge of where to avail and what
benefits it has to offer them.
For those that have availed of crop insurance, they shared varied experiences, often unfavourable which include:
Features of the insurance product are too complicated or too technical to be understood by farmers.
Documentary requirements are too tedious.
Benefits and claim procedures are not understood very well (example: on eligible rice varieties)
Payment schedule is not flexible. Many farmers prefer paying after harvest rather than 15 days after planting as required.
Difficult requirement that they had to take loans from Landbank in order to get an insurance coverage. Since Landbank does not
disburse any loans to them (as they have no collaterals) they could not avail of crop insurance.
Issue of eligibility for crop insurance. Eligibility is restricted to those that do not live in risk-prone area. As a consequence, people
who benefited from payouts in one year could not apply in the subsequent year because they were considered as high-risk clients
for subsequent years.
The PCIC changes the rules on risks categorization. PCIC is currently reclassifying land areas to adapt the risk categorization to
climate change.
The perceived mismatch between premiums and benefits. FGD participants were not really sure how much they had to pay, but the
most common answer was around P1000 per hectare or P663 deductibles per P10000 loan.
Typical payouts in case of natcat range between P3000 and P5000. Farmers complained that this would not cover the expenses for
the inputs going up to P20000. This can be explained by the fact that the adjusters take into account the stage of the crop when
calculating the payout. Consequently, calamities hitting the crop early in the cropping calendar lead to a significantly lower payout.
The whole payout can only be reached if the calamity occurs during harvest.
Delayed payment of claims. Some mentioned that they would only obtain the payout after two months. Others pointed out that the
claiming process involves a tremendous administrative work and asks the insured to go several times to the PCIC office. These high
cost-barriers discourage the people to buy this insurance.
The peoples discontentment with the current crop insurance scheme can also be derived from the following example: a cooperative
operating in Leyte with around 25000 members, tried to oblige its farmer members to ensure production loans via PCIC because they
struggled with low payments in times of natural catastrophes. However, the assembly did not accept the proposal because the premiums
would have eaten up a large part of the loans and PCIC does not enjoy sufficient public confidence.
Whereas officially the requirements for services offered by PCIC are not that restrictive (see a policy
example in the appendix) most farmers complained about high barriers, high transaction costs and
difficulties to apply for insurance covers. Therefore, for FGD participants it was important that
everybody could avail of the insurance product.
52
March 31, 2010
Finally, the system of distribution should not only be easily accessible with putting the client in the
focus, but the insurance provider shall be trustworthy. The credibility of the insurance company is very
important especially for those having had bad experiences with former insurance schemes. The College
Assurance Plan, a pre-need company intended to cover tuition fees, provoked a scandal starting in
2004 when it failed to pay its obligations to plan holders whose policies have matured (see box). Most of
those affected were unable to recover their whole amount of premiums resulting in a significant loss of
trust. This incidence helps to explain the importance of frequent payouts for the clients, at least in the
beginning, in order to build up the necessary credibility. Most people were indifferent when asking who
should distribute the product. Somewhat paradoxically some of those complaining about PCIC even
suggested the same company to distribute the new product. Generally, as long as the people see that
others buy the product they do not care who it sells. Still, groups of MFI clients or cooperative members
usually referred to their organization to distribute the product.
It is important to note that NGOs, MFIs and cooperatives are not per se perceived as trustworthy
entities. Respondents of the HH survey endow them with more trust than private companies, such as
banks, private insurers, and PCIC, but have more faith in barangay related institutions. The Philippine
meteorological agency PAGASA is also considered as a relatively trustworthy organization.
The modality of transactions shall be easy. Having an agent collecting the money was the most
preferred option among HH respondents, but others were also ready to go to the nearest insurance
office if there is one near the market place. Roughly 10% were familiar with conducting money
transactions with cell phones and nearly two third were interested in receiving insurance payouts per
SMS8.
Still, the results suggest that known concerns of trust, but also other obstacles, especially ignorance of
how it works shall be addressed first before introducing such an insurance scheme.
VII. Recommendations and Next Steps

7.1 Recommendations
Based on the results of the FGDs and the HH survey the following recommendations might be
considered for the design of the insurance product for natural calamities.
On Product Design:
1. Products should be scalable. People look first on the premium before considering benefits when
deciding on whether to buy an insurance product. Premiums are affordable if they match other nonbasic expenses and the survey shows that even those living under the food-threshold are willing to
pay for insurance under certain conditions. Since households endowments might strongly differ it
is important to offer products with a wide range of possible premium amounts. A good shot would
be to offer multiples of P50/month. If people gain trust in the product they are likely to purchase
policies with higher face value in following (!) years in order to match their risk exposure. People
8
This might overestimate the real figure because it became clear to the authors that some respondents had
difficulties in differentiating using money transaction services from sending text messages for loan requests.
53
March 31, 2010
display very different perception of risks and have very different exposures. Farming households
typically feel more vulnerable to natcats than others and thus, experience higher losses in case of a
natural disaster.
2. Payment schedules should be flexible. Target customers are more likely to purchase natcat
insurance if premium payments are well within their natural or usual cash flow cycles. Natcat
insurance premiums may be paid alongside with their regular loan repayment/(health, life,)
insurance payment schedules if they are members of microfinance institutions or cooperatives. For
those having regular formal income premium payments shall be every two weeks when salaries are
disbursed; for those depending on agricultural activities payments shall coincide with the harvest
season when cash inflow is high or should allow for different weekly/monthly premiums throughout
the year.
3. Products shall have a good timing. Hazards have different probabilities to occur across the year.
Exposures are unequally distributed in time as well. People are more attracted to products that
cover high-exposure- and high-probability-of-hazards-periods. Marketing shall consider this timing
as well. For instance, typhoon protection plans shall be marketed not earlier as shortly before the
beginning of the typhoon season. At the same time, people are unlikely to pay a whole coverage at
once, but prefer paying premiums step by step. Therefore, premium collection should occur
throughout the year.
4. Payouts should be frequent. Target customers are interested in knowing whether the product works
or not. Therefore, frequent payoutsthat is to say, at least every three harvest seasons, but at best
in the first harvest seasonshall help to build up credibility and to attract customers. People have a
high discount rate and expect fast returns. It is more important for them to have more, but small
than little, but high payouts.
5. Products should be linked.
5.1 Farmers are more likely to buy insurance if the product is directly linked to production loans. This is
because most farmers are in a debt circle and are driven by the resulting backwardness of
reasoning. Many farmers income is not used as investment capital for the next season, but is used
to pay back loans dating back up to several seasons before the current harvest. Therefore, farmers
are unlikely to pay for an insurance product that covers the following (!) harvest period. Linking the
insurance to a loan would result in collecting the premiums after the harvest. That corresponds to
the usual farmers cash flow and way of financing his activities. Loan linking might be interesting for
other target groups as well.
5.2 Linking insurance to existing group structures might help to reduce basis risk and transaction costs.
Many MFIs take advantage of group lending or similar group-related lending mechanisms when
disbursing their credits. Index-based insurance products can easily be linked to these structures by
taking the group as the insured entity. In case of a qualifying event the MFI balances the account of
the whole group and reduces the amount the group has to pay back. This lowers basis risk for the
individual, as basis risk and basis chance might cancel out within the group.
5.3 A combination of saving and insurance products might also attract some target clients, especially
those having a regular and good income. Getting a payout when a calamity hits the community as
well as obtaining part of the premiums back at the end of the coverage period might help to reward
loyal members. For instance, such a product can feature a five years period where premium
54
March 31, 2010
payment takes place and a ten years coverage period. If the member decides to drop out after ten
years he will get a certain percentage of her premiums back, independent on whether she will have
availed of the insurance product or not.
6
Consider smart subsidies. People expect high returns when investing money. Even though
insurance is considered as a tool to reduce risk, for most people it is also an investment that should
guarantee good benefits. Subsidized products in the market (such as PhilHealth) have increased such
expectations. The gap between the willingness to pay and the expected payout might be bridged via
smart subsidies. In some sense, these subsidies are expected from the target population and might
well be justified. Most people in the HH survey see primly the state in the role of helping those being
affected by natcats and not the individual itself. An insurance product is a way of dampening the
impact of natcats and therefore reduces ceteris paribus the costs of public relief measures. It is
important to clarify and make transparent the costs and benefits of subsidies before introducing
them. A smart way of dealing with subsidies is by using risk-layering systems: the state might cover a
certain risk-layer such as low-frequent and high-impact events, thereby reducing the risk for the
insurer and ultimately the premium for the end client.
Lessen requirements. Natcat insurance should be available for everybody, but especially promoted
for the poor by using corresponding distribution channels. Documentary requirements, if any,
should be made simple and easy to understand and easy to accomplish and should be designed to
match the literacy level of the poorest farmers. Products should be made simple and easy to
understand for both the customer and for the agents that will promote the use of natcat indexbased insurance products.
Promote financial literacy first. Low-income groups need to be further educated on insurance and
its importance. There should be a general insurance education program aimed at both the end client
and the distribution channel that will complement the insurance product offer. This training or
education component shall explain to the farmers the features and procedures of the insurance
product. The insurance education program should be simple and easy to understand incorporating
adult learning methods and financial literacy games9. Lecture and orientation on insurance products
may tend to be too technical and complicated for ordinary farmers to understand. Such programs
tend to increase the demand from both the end clients and the distribution channels in promoting
the product.
Target the right pool of clients. Micro insurance products are not right for everyone, at least not at
every time. When people fail to meet their basic needs because they lack sufficient infrastructure or
when no risk mitigation projects have been developed to protect their community from frequent
natcats, micro insurance might not be an appropriate solution. As a matter of fact, targeting
communities with strong and active Disaster Coordinating Council or Planning and Development
Officer might be a way of making sure that the insurance initiative is flanked by similar projects
helping to protect the community. For instance, developing early warning system facilities and
designing index-based insurance products might go hand in hand.
Designing a flexible, scalable, well timed, linked and simple product that is accompanied by inclusive
education programs shall help to reduce the premium benefit gap. On the one hand, successful
products from private insurance companies, such as St. Peters Life plan, show that the poor are
9
For instance, Carter et al. (2008) explain the role of educational games in promoting index-based insurance
schemes.
55
March 31, 2010
interested in well-designed products. On the other hand, even highly subsidized crop insurance products
do not sell because they fail the poors needs.
On Product Distribution:
Microinsurance is commonly provided by MFIs/cooperatives as a means of mitigating risks in case the
borrower is unable to pay the loans because of unforeseen events. Accidents, illness in the family, death
of family members or loss of livelihood due to fire or natural catastrophes often causes burdens on the
familys finances. Credit life insurance products and/or micro-insurance are offered to provide the client
a means for recovery in times of such unforeseen events.
Insurance products have also become a source of competitive advantage for MFIs. Clients now choose
their MFIs based on the services and benefits they provide and the insurance products offered by an
MFI. MFIs have been known to compete on this basis.
10 If MFIs are considered as the primary distribution channels of natcat insurance, the natcat insurance
itself should be attractive, not only to the target clients but also for the insurance distribution
channel. MFIs will most likely adopt or distribute such insurance product if there are also clear
benefits that will be received at the level of the MFI. Offering such products will also entail costs in
its distribution and therefore such distribution costs should be recoverable from the sale of the
insurance product.
11 A certain degree of flexibility should be allowed at the MFI level to customize the delivery of the
insurance product. At the distribution level MFIs are in the better position to determine the most
appropriate timing or mode of payment to be made for the insurance premiums.
12 MFI networks may also play a role in the distribution for micro insurance products to achieve
economies of scale. The MFI network can provide marketing and promotion support to its member
institutions with regards to micro insurance. The MFI network can also provide meso level
monitoring of product performance and provide the sector with research and information support
not normally available at the MFI level. Capacity development support can also be another role MFI
networks can play.
7.2 Next steps

Micro insurance for the protection against natcats is a promising tool to alleviate poverty. This study has
shown that the majority of poor people are interested in such a product, and that across all four
provinces. Perception of risks plays a crucial role in determining demand, but an insufficient exposure to
risk is unlikely to be a bottleneck in the covered municipalities. Most people are exposed to different
hazards, especially typhoons, floods and drought and secondary effects are strong enough to rise
demand for a natcat insurance even among those who are not directly affected. As a matter of fact,
financial literacy and product design reveal to be very important factors in shaping demand. Distribution
channels should be the primary contact for both concerns. Finally, index-based insurance products are
not the only way in protecting the poor from the effects of natcats. First, alternative products, such as
crop insurance, exist and might be the better solution for clients because they offer individual payouts
56
March 31, 2010
according to the incurred damage and present attractive premium-benefit leverages due to subsidies.
They are, however, neither well promoted nor widely used. Introducing an inclusive index-based
insurance product might have the beneficial effect of stimulating the market and encourage existing
players to strengthen their efforts in seeking clients. Similarly, introducing a portfolio-insurance for MFIs
and cooperatives shall create competition to existing meso-level insurance mechanisms such as
Agriculture Guarantee Financing Program (AGFP). This shall create direct benefits for the clients.
Coming efforts should concentrate on the following aspects:
1. Map distribution channels. For this, an extensive overview on MFIs and cooperatives working in the
pre-selected provinces should be prepared. Efforts should not be restricted to one player per
province, but should aim at an inclusive sample of distribution channels in order to increase the
number of potential clients and increase competition.
2. Define qualifying events and calculate realistic premium-benefit leverages. This demand study
should help to identify relevant hazards that have an impact on the poors lives. A potential trigger
should be roughly designed and calibrated to different qualifying events (e.g. one-year typhoon
event, three-years typhoon event etc.). This should include a respective calculation of realistic
premium-benefit leverages. Triggers should not be restricted to weather data indexes. They might
be complemented or substituted by area-based yield/damage indicators and/or satellite technology.
Offering several triggers per province should address the issue of risk heterogeneity within the
visited provinces.
3. Prepare a flexible, but concrete product matrix. Distribution channels should be the key players in
designing the final product and adapt it to the needs of its clients. Results from this demand study
should help to give some ideas and to guide efforts. Still, it is not extensive enough to fit each target
groups needs. Designing a product is costly and asks distribution channels for an investment.
Therefore, it should be made as easy as possible for them to bring in their ideas. As a result, it is
necessary to prepare a flexible product matrix with a range of different features among which
people might choose. It should be concrete enough and provide realistic premium-benefit leverages
as well as definitions of qualifying events.
4. Prepare a financial literacy game. Designing a product is difficult when it is not fully understood.
Therefore, it is necessary to explain thoroughly the way how insurance products work to the target
population. Before going back to potential clients a short financial education game should be
developed to prepare the question of product design.
5. Contact distribution channels and refine the product design. The product should be attractive for
both the end client and the distribution channel. Therefore, both the MFI/cooperative and its
clients/members should be involved in the process of designing the product. Financial education
games and the product matrix should be provided as input to guide the discussion.
57
March 31, 2010
References:
M. Pelling, A. Maskrey, P. Ruiz and L. Hall: A global report Reducing Disaster Risk: A challenge for
development; UNDP, 2004
C. G. Hina, C. G. Lomboy, E. C. Torrente: Demand Study of Microinsurance in the Philippines; Planet
Finance & gtz, 2009
G. M. Llanto, M. P. Geron and J. Almario: Making insurance markets work for the poor: microinsurance
policy, regulation and supervision Philippines case study; CGAP, 2009
Authors unknown: Mapping Philippine Vulnerability to Environmental Disasters, Manila Observatory,
2005
S. Baas: The role of local institutions in reducing vulnerability to recurrent natural disasters and in
sustainable livelihoods development Philippines; Asian Disaster Preparedness Center, 2006
E. Engel, N. Piepenbrink, J. Scheele, C. Dorer, J. Ferguon, W. Leujak: Being prepared: Disaster Risk
Management in the Eastern Visayas, Philippines; Humboldt University & GTZ, 2007
National Statistical Coordination Board: 2003 City and Municipal Level Poverty Estimates; 2003
M. E. Hellmuth, D. E. Osgood, U. Hess, A. Moorhead & H. Bhojwani: Index insurance and climate risk:
Prospects for development and disaster management; IRI, 2009
M. R. Carter, C. B. Barret, S. Boucher, S. Chantarat, F. Galarza, J. McPeak, A. Mude & C. Triveli: Insuring
the never before insured: Explaining index insurance through financial education games; Basis, 2008
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Study on Demand of Insurance for

Microinsurance Innovations Program

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

Study on Demand of Insurance for

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

Objectives of the Study

Analytical Framework and Structure of Report Presentation

Part 1 Profile of Pre-selected Provinces

Presence of potential distribution channels

Exposure to and relevance of natural catastrophe risk

Part 2 Findings and Analysis: Household Interviews and FGDs

Natcat Risk Exposure and General Vulnerability

Risks and Specific Vulnerability

Risk Preparedness and Coping Mechanism

Financial Literacy & Insurance Design

VII Recommendations and Next Steps

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

Bureau of Agricultural Statistics

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

Profile of Pre-selected provinces

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

Results of Household interviews and FGDs

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

National Statistical Coordination Board, Philippine Poverty Statistics, 2006 estimates

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

Objectives of the Study

Methodologies of the Study

# of FGDs (Ave Pax

Agusan del Sur / 3

GTZ Microinsurance Innovations Program for Social Security (MIPSS), Philippines

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes

March 31, 2010

Study on Demand of Insurance for Natural Catastrophes