Flood insurance may become more expensive in the Philippines

Tropical Strom Haikui

Tropical Strom Haikui

Tropical Strom Haikui exacts terrible toll on Philippines capital

A devastating flood has caused havoc in the Philippines in the wake of Tropical Storm Haikui. Heavy rains from the storm, as well as those occurring after the event, have caused nearly of fifth of the bustling metropolis of Manila to be submerged. More than 900,000 residents have been evacuated from the area, seeking refuge outside of the city and on nearby islands that were not affected by the disaster. The main island of Luzon suffered a serious blow to its rice crops, which is expected to increase the price of food in the Philippines by 39%. The cost of flood insurance is also expected to spike.

Insurers investigating the extent of the damage

The country’s insurance companies and global risk modeling firms are still evaluating the full extent of the damage. Currently, the damage is expected to be in the hundreds of millions, though may breach the billion dollar mark as more the of the storm’s impact is assessed. The country’s Department of Budget and Management has announced that a calamity fund has been made available for the victims of the natural disaster. This money will be used to provide some stability to the troubled Manila and help repair the damage caused by floods.

Flood insurance prices expected to jump

Flood insurance is expected to become more expensive in the wake of the event. The country’s insurance companies, as well as foreign companies that have ties in the Philippines, are being confronted with massive financial losses. In an attempt to mitigate these losses, insurers are expected to raise rates, though by exactly how much is not yet certain. Insurers and risk modeling firms are currently investigating the extent of the damage caused by Tropical Storm Haikui and will provide more information concerning the potential changes to flood insurance in the near future.

Government may address any problems that arise from costly flood insurance changes

For island and coastal regions, flood insurance is quite important. Such coverage could help homeowners recover from major catastrophes that are, largely, unpredictable. Because of the potential damage storms like Haikui can produce, as well as their unpredictable nature, flood insurance is often quite expensive. How the Philippines government will address the potential issues that may arise from more expensive flood insurance coverage has yet to be seen.

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