THE Asian Development Bank (ADB) has approved a $400 million policy-based loan to support reforms to increase the efficiency of the Philippines’ insurance industry.
According to the ADB, the ‘Insurance Reform Program (IRP) Subprogram 1’ supports ‘broader’ financial sector development reforms in regulation and supervision, including greater intermediation of long-term credit for government infrastructure projects.
‘It is designed to foster a more efficient, consumer-oriented, and technologically advanced insurance market that strengthens climate risk management and disaster resilience,’ the multilateral lender said through a statement.
Andrew Jeffries, ADB Country Director for the Philippines, was quoted in the statement as saying that the program is a ‘strategic investment’ in the Philippines’s sustainable and inclusive economic future.
‘By modernizing the regulatory framework, we are not only strengthening the insurance industry itself-we are building a critical line of protection for the nation, mobilizing long-term capital for development, and ensuring that the benefits of economic growth reach every Filipino entrepreneur and household,’ added Jeffries.
According to the ADB, the program will be implemented in three ‘sequenced’ subprograms, in close partnership with the Insurance Commission.
‘It supports comprehensive reforms-including cutting-edge digitalization and climate finance-to enhance resilience, financial inclusion, and consumer trust,’ read the statement.
According to the ADB, the program also ‘complements’ the lender’s recent support for related reforms, such as parametric and indemnity insurance under the ‘Second Disaster Resilience Improvement’ (SDRI) program, agriculture insurance under the ‘Climate Change Action’ program (CCAP) and health insurance under the ‘Build Universal Health Care’ (BUHC) program.
In a statement the ADB issued last January, the lender explained that the SDRI program ‘is a multiyear contingent disaster financing program with an option to replenish the facility twice, upon approval by the ADB Board.’
‘Loan renewals are allowed if there will be unutilized amounts after the initial 5-year period,’ the ADB added. That month the ADB announced the approval of a $500-million loan for the SDRI program.
Meanwhile, the CCAP ‘supports the Philippines in implementing its national climate policies and delivering on its climate commitments, including its nationally determined contribution (NDC), which aims to reduce greenhouse gas (GHG) emissions by 75 percent by 2030 and scale up climate change adaptation.’
Finally, Subprogram 2 of the BUHC program ‘builds on government efforts to implement the three key reform areas of the Universal Health Care Act of 2019: sustainable financing and strategic purchasing; integrated delivery of quality health services; and, information management and performance accountability.’
According to the ADB, the IRP is its first dedicated insurance reform program, building on the bank’s ongoing support to the Philippine insurance industry and capital markets development since the late 1990s.