The Insurance Commission has warned underwriters that relying solely on historical loss data is no longer sufficient to price climate risks, urging the industry to overhaul capital management strategies as severe natural disasters intensify.
Insurance Commissioner Reynaldo Regalado called for stronger climate resilience and innovative risk financing during the 22nd Asia Nat CAT and Climate Change Conference on Thursday.
Regalado said insurers must adopt forward-looking approaches in underwriting, pricing, reserving, and capital management, noting that “historical loss experience alone may no longer adequately reflect future climate-related risks.”
To underscore the immediate threat to the sector’s capital cushions, the commissioner cited a recent magnitude 7.8 earthquake that struck General Santos City and neighboring areas in Sarangani, South Cotabato, Soccsksargen, and Davao Oriental, which displaced thousands of residents and damaged critical infrastructure.
“These events remind us that the most catastrophic disasters are no longer rare, once-in-a-generation occurrences,” Regalado said. “As risks continue to evolve, so too must our efforts to strengthen financial resilience and ensure that people, businesses, and communities can withstand shocks and recover more quickly from their impacts.”
The push for structural pricing adjustments comes as developing Asian economies face widening insurance protection gaps due to escalating severe weather and seismic patterns.
Despite the challenges posed by climate change, Regalado said he remains optimistic about the opportunities for innovation and collaboration within the industry.
“What matters most is that we are prepared—because risks become far less intimidating when we are ready for them,” Regalado said. “I hope this forum will be a chance not just to exchange ideas and experiences, but also to identify practical solutions that will strengthen the resilience of our industry and the communities we serve.”
