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Braving the Storm Together

Australia’s support helps strengthen a typhoon insurance product to shelter Filipino farmers


With around 20 typhoons a year in the Philippines, Rosita Quilala has weathered many a storm in her life. She has been farming on a small, family-owned plot of land in Claveria, a town in the northern province of Cagayan, for the last 37 years. Now in her early fifties, Rosita admits that the fight against Mother Nature is getting harder. “I struggle to get through a planting season without the threat of typhoons,” she said. “They destroy my rice farm and my crops, wiping out months of hard work and hope.”

Agriculture is the primary source of earnings for low-income people living in rural areas in the Philippines, and the only source for many of the country’s poorest households. The sector accounts for roughly 10 percent of the nation’s gross domestic product (GDP) and employs around 23 percent of its workforce.

However, only one percent of total bank lending is extended to smallholder farmers. Most financial institutions consider them to be too high-risk due to low insurance coverage and the frequent typhoons that ravage the country. There have been several crop-insurance pilot schemes in the Philippines, but many have faced difficulties in developing a commercially sustainable product that smallholder farmers can afford.

To address the issue, the International Finance Corporation (IFC), the largest global development institution focused on the private sector in emerging markets, the Center for Agriculture and Rural Development (CARD), the largest microfinance and microinsurance group in the Philippines, and its joint venture CARD Pioneer Microinsurance Inc. (CPMI), developed and fortified an innovative typhoon insurance product that can protect both the farmers and the insurers. The project was supported by the governments of Australia, Canada, and the Global Index Insurance Facility, a multi-donor trust fund managed by IFC.

The typhoon insurance product is based on a risk-pricing system that allows the insurer to strategically manage its typhoon risk but also set a reasonable and sustainable price for its customers. The risk-pricing system was based on the analysis of historical agricultural damage and weather data by actuarial experts from IFC.

It’s a concept that has worked. As of June 2021, more than 29,000 farmers in 12 provinces have purchased the typhoon insurance product, packaged with loans. What’s more, over 7,000 have received payouts, including around 800 who were hit by Typhoon Ompong in 2018 and around 10 who were hit by Typhoon Goni in November 2020.


The typhoon insurance also allows farmers to settle their claims within two to five days. As a result, more farmers are encouraged to take out policies, and the product has enjoyed repeat purchases by farmers who have made claims and received settlements.

Aside from encouraging farmers, it has also increased the confidence of lenders in providing financing to smallholder farmers. Now, two other microfinance institutions besides CARD are selling similar products.

This is the first private sector-led crop insurance product in the Philippines. It has helped increase farmers’ resilience to natural disasters and improve access to financing, which for many has been a lifeline in the face of COVID-19,” said Jean-Marc Arbogast, Country Manager for the Philippines at IFC.

Rosita has already used the money she received from her settlement to pay for her household needs, the upkeep of the farm, and her children’s school expenses. “What I like about it is how quickly we receive the claims on our damaged crops,” she added.


She is particularly thankful for something that doesn’t cost her anything — peace of mind. The knowledge that she is insured, and that life won’t come to a stop every time a typhoon hits her town, has given her a renewed sense of optimism, and the confidence to brave any storm.

Australia values our partnership with the IFC, CARD and CPMI which are delivering results to benefit Filipino farmers and their families. Australia remains committed to supporting inclusive economic growth and climate change resiliency, which have proven to be important during the pandemic.


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