Philippine reinsurance costs to hike from climate change impact

Driven by the high risk of natural disasters amidst climate change, non-life insurance plans may become more expensive.

Malayan Insurance said the Philippines’ reinsurance cost is expected to surge 50%, according to a report by Philstar Global.

The price increase is most likely driven by the high risk of natural disasters amidst climate change, whilst a more costly non-life insurance coverage.

Officials from Malayan Insurance also said that premiums for non-life insurance products are increasing due to a combination of factors. 

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“Now, they have priced it much more than what it was before. And when you have a key ingredient that increases its cost, that also increases the price of non-life products,” Eden Tesoro, Senior Vice President and Chief Underwriting Officer of Malayan said.

These include the hardening reinsurance rates and unfavourable risk ratings of the Philippines.

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It's important to highlight that reinsurance coverage is crucial in maintaining the financial stability and operational capability of insurance companies, even in the face of substantial losses. Reinsurance constitutes a significant portion of every insurance product.

Tesoro noted that reinsurance costs have surged by 50% this year, particularly for countries vulnerable to catastrophes like the Philippines. 

Additionally, the impact of the pandemic and global tensions have contributed to the rise in prices.