The Organization for Economic Cooperation and Development (OECD) has urged the Philippines to introduce mandatory home insurance and adjust property insurance requirements as climate-related risks continue to drive catastrophe losses and influence insurance demand in the country. The recommendations come as recurring typhoons and floods are expected to contribute to growth in the Philippine property insurance market over the next few years, according to data and analytics firm GlobalData.
In a recent assessment of the Philippine insurance sector, the OECD said the current framework leaves a large share of households and small businesses exposed to physical damage from natural catastrophes, despite the expansion of microinsurance in other lines. “Microinsurance has been successfully deployed, but mostly for life insurance and third-party motor vehicles, leaving homes largely unprotected against extreme weather events and natural disasters,” OECD wrote, as reported by Manila Bulletin.
Home insurance penetration remains limited, the organisation noted, with existing requirements largely tied to mortgaged properties. This focus on collateralised lending, rather than on owner-occupied homes more broadly, has resulted in what the OECD described as a sizable protection gap. “A potentially significant reform would be to make home insurance mandatory in the Philippines, as it is in a few other countries, thus reaching a larger pool of households and firms, dispersing risks, and helping to reduce premiums,” the organisation said. It cited markets such as France, New Zealand, Poland, Switzerland, Turkey, and Italy as examples where mandatory or quasi-mandatory schemes support catastrophe protection. The OECD also recommended wider use of public–private partnerships and reinsurance capacity to share catastrophe risk, alongside product structures that give policyholders options between parametric, indemnity, or hybrid payout mechanisms.
The OECD’s proposals extend beyond compulsory purchase. It encouraged regulators to embed stronger risk-based incentives into pricing by offering premium discounts to homeowners that upgrade to disaster-resilient construction or undertake weather-proofing of properties. The aim is to link coverage conditions more closely to mitigation measures and evolving exposure patterns. Another focus area is the composition of microinsurance portfolios. “Microinsurance uptake is high but concentrated in life and vehicle insurance, leaving most households exposed to economic damages from typhoons and floods,” the organisation said. It suggested that expanding microinsurance products to cover physical assets, including low-value homes and contents, could change how low-income customers absorb losses from natural hazards. To address affordability constraints, especially for poorer households, the OECD recommended establishing “a dedicated fund to subsidize premiums for low-income households.” This would operate alongside market-based pricing and private capital and could support any future mandatory home insurance framework.
The OECD’s analysis comes against a backdrop of severe weather events that continue to test the Philippine insurance market and highlight gaps in protection. On Nov. 9, 2025, super-typhoon Fung-Wong made landfall in the Philippines, only days after Typhoon Tino. The events brought flash flooding, storm surges, landslides, and gale-force winds across several regions. The Department of Agriculture estimated that Fung-Wong alone caused approximately PHP968 million (US$16.8 million) in damage to the agriculture sector. The Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) has reported that the frequency of super-typhoons affecting the country has risen by more than 100% over the past 20 years, while World Bank estimates put the average annual damage from severe storms at around US$3.5 billion.
Manogna Vangari, insurance analyst at GlobalData, said: “The global climate crisis is contributing to the increased intensity and frequency of tropical storms and typhoons. Despite rising catastrophe‑related losses, the Philippine property insurance market is expected to expand steadily. It is expected to remain profitable, with the loss ratio projected to remain well below 50% during the 2026–30 period.” GlobalData expects property insurance claims to account for 22.7% of total general insurance claims in 2026, reaching PHP6.4 billion (US$110.9 million), although the firm noted that final claims could exceed this projection once the full impact of recent typhoons is captured. According to GlobalData’s Global Insurance Database, the Philippine property insurance segment is forecast to grow at a compound annual growth rate of 11.5% over 2026–2030, with gross written premiums increasing from PHP66.9 billion (US$1.2 billion) in 2026 to PHP103.3 billion (US$1.8 billion) by 2030.
Policy and market initiatives are influencing demand for property and engineering coverage. In March 2025, authorities approved a PHP149.5 million (US$2.6 million) flood-control project in Liloan, Cebu, with a requirement that contractors secure all-risk insurance. The structure of the project links climate-exposed public works to risk transfer arrangements and sets out a framework for financing reconstruction after flood events. On the retail credit side, mortgage-related protection is developing. In August 2025, Pag-IBIG Fund launched housing loan insurance claims for typhoon-damaged homes in Pangasinan, ensuring a five-day processing window and allowing claims without a formal calamity declaration. According to GlobalData, this approach is intended to reduce delays in disbursement and shows how property insurance can affect household finances after severe weather.
At the national level, the Philippines has adopted parametric and catastrophe insurance solutions, with support from the World Bank, to obtain faster and more predictable funding for disaster response. In agriculture, the Philippine Crop Insurance Corporation (PCIC) – working with local governments – is using satellite mapping to speed up claims assessment and settlement, a change that may influence uptake among farmers and lenders. Microinsurance providers are also targeting low-income and underserved groups with multi-peril products that cover fire, typhoon, flood, and earthquake risks. Typical offerings provide payouts of up to PHP20,000 (US$346.68) for annual premiums starting at around PHP250 (US$4.33), focusing on rural communities and informal workers.
The OECD’s push for mandatory home insurance in the Philippines, together with GlobalData’s projections of double-digit premium growth, points to shifts in a market where high catastrophe exposure is increasingly reflected in demand for structured protection. Vangari said: “Product innovation – such as parametric and comprehensive catastrophe covers – together with infrastructure investments and government initiatives, should widen access, speed up claims settlement, and enable the property insurance market to deliver more reliable financial protection against intensifying natural disasters.” How Philippine regulators respond to the OECD’s recommendations on compulsory cover, targeted subsidies, and risk-based incentives is likely to be closely monitored by insurers operating in other catastrophe-exposed Asian markets considering adjustments to property and natural catastrophe insurance frameworks.
