Insurers in the Philippines are preparing for a potential surge in claims as persistent monsoon rains, intensified by recent tropical storms, have led to extensive flooding across Metro Manila and neighbouring provinces.
On July 22, floodwaters reached knee to waist height in multiple districts, resulting in the closure of schools, suspension of government operations, and flight cancellations for a second consecutive day.
Thousands of residents living near rivers and waterways were evacuated overnight as water levels rose.
In Manila, families sought refuge in temporary shelters after their homes were inundated, according to ABS CBN.
The national disaster agency reported that many evacuees remained in emergency centres as rainfall continued, following the impact of Tropical Storm Crising in the country’s north the previous week.
The National Disaster Risk Reduction and Management Council (NDRRMC) has confirmed at least six fatalities and six missing persons since Crising passed near the country.
According to CNA, the Marikina River overflowed, prompting the evacuation of over 23,000 people from riverside communities to schools and public halls.
Additional evacuations were conducted in Quezon, Pasig, Caloocan, and the main government district, with the total number of displaced individuals exceeding 47,000.
Wilmer Tan of the Marikina rescue office noted that most evacuees were from low-lying areas adjacent to creeks, as the river reached 18 meters in height.
In Caloocan, local officials reported that an elderly woman and her driver were swept away while attempting to cross a flooded bridge.
Mayor Dale Gonzalo Malapitan later confirmed the recovery of the driver’s body several kilometres downstream.
Although floodwaters began to recede in some areas by Tuesday afternoon, the national weather service identified a new low-pressure area off the east coast, which has since developed into a tropical depression.
This system is forecast to bring additional heavy rainfall through the week, extending the period of displacement and disruption for affected communities.
The Philippines experiences an average of 20 storms or typhoons annually, with the most severe impacts often felt by low-income communities.
The frequency and intensity of these events have underscored the importance of disaster risk financing and insurance (DRFI) mechanisms.
A recent ASEAN Secretariat report highlighted uneven DRFI adoption across Southeast Asia.
The Philippines has implemented catastrophe bonds and parametric insurance to support disaster response, but insurance penetration remains below 10% in most ASEAN countries.
Barriers such as low household income, limited financial literacy, and underdeveloped distribution networks continue to restrict insurance uptake.
Agricultural and aquaculture insurance programs are also under strain. High loss ratios, driven by adverse selection and limited participation from lower-risk policyholders, have led to unsustainable claims volumes in the Philippines and neighbouring countries.
Some schemes have been suspended due to budget constraints and high payouts, particularly during the COVID-19 pandemic.
