Facing Life’s Storms

“If you spend all your life waiting for the storm, you’ll never enjoy the sunshine.” – Morris West


The Philippines has been labelled one of the most dangerous places in the world when it comes to natural calamities. Being in the so-called Pacific Rim of Fire and the Typhoon Belt, the country is vulnerable to earthquakes, volcanic eruptions and super typhoons.

Yet despite this, many Filipinos are still unprepared to face the dangers that nature regularly offers. Maybe it’s because of their “bahala na” mentality, or probably it can also be due to their forever cheerful attitude that they are able to get by.

But it doesn’t have to be a game of “ala tsamba” or playing by chances. Over the centuries, there have been tools that were developed to help societies face the grim realities of nature with confidence.

One of these tools is insurance.

Mr. Michael Rellosa, chairman of Philippine Insurers and Reinsurers Association (PIRA), the umbrella organization of 87 non-life or general insurance companies in the country, explains that insurance is protection that one gets for himself.

“We purchase insurance to protect big ticket items that we have worked long and hard for. We ensure that in case of the myriad perils that we face, like fire, flooding, volcanic eruptions, earthquakes, etcetera, then we have a means of being indemnified for our losses and we will then have the capacity to rebuild, repair or replace what we have lost,” he said.

Mr. Rellosa noted that majority of Filipinos only learned of the term “Acts of God” when tropical storm Ondoy flooded the streets of Metro Manila and submerged billions worth of properties in September of last year. He cited some very important lessons that Filipinos should never forget from the experience.

They are:

Lesson No. 1: Insurance is very important.

Mr. Rellosa reiterated that an average of 20 typhoons visit the Philippines every year. With this reality, AOG coverage should have been a requirement by all banks for those getting car loans. It was only after Ondoy that this was implemented. It was also only after Ondoy that many car owners realized the need for such a cover, which is just an additional 0.5 percent (one half percent) of the insured amount of their vehicle.

Lesson No. 2: Insurance is a contract.

Mr. Rellosa noted many Filipinos only learned how insurance works after Ondoy.

“They have learned that certain risks are stipulated in that contract. If the risk – such as a natural calamity like Ondoy – is not included in the contract, then the insured cannot file a claim for it,” he said.

Another aspect of insurance that became clear to Filipinos after Ondoy was the adjusting aspect. According to Mr. Rellosa, adjusting companies are independent third parties that examine the cause and quantum of loss and submit estimates as to how much should be paid in claims.

“Because of the sheer volume of affected cars and property, the limited number of adjusting companies were literally deluged with work, which considerably delayed the release of claims,” he said.

Lesson 3:  The modern automobile is very vulnerable to the elements.

Mr. Rellosa said that the automobile has evolved in a million ways since the days of Karl Benz and Henry Ford. With more electronic and computerized parts, today’s automobile is a very fragile piece of equipment. Its arch enemy is water.

“Thus, there are cars that were not repairable anymore after Ondoy because installing new electronic parts would be more expensive than buying a new car,” he said.

Lesson 4: The insurance industry is very stable.

The Insurance Commission estimates that at least P15 billion were lost to Ondoy and Pepeng in 2009.  Despite this huge loss, the industry has remained stable – thanks to the support it enjoys from reinsurance companies abroad.

Mr. Rellosa explained that reinsurance is insurance for insurance companies.

“Insurance firms buy this to protect themselves from losses beyond their financial ability to absorb,” he said.

Mr. Rellosa stressed that more and more Filipinos are starting to appreciate insurance companies because they have realized that in this country a natural disaster is always a big possibility.

“We may not be able to prevent storms and floods from ruining your cars or your homes, but we will help you if the worst calamity ever happens. Sabi nga namin sa PIRA, sa kagipitan, walang iwanan!” he said.

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