Philippines: OECD Recommends Mandatory Home Insurance for Businesses

The Philippines is being urged to reform its insurance sector by mandating home coverage and incentivising disaster-resilient construction, according to a new report by the Organisation for Economic Co-operation and Development (OECD). The Paris-based body warned that the country faces a “massive” protection gap as one of the world’s most climate-disaster vulnerable nations.

The OECD’s assessment, reported by the Manila Bulletin, highlights a significant imbalance in the insurance market. While microinsurance products have gained traction in life and third-party motor vehicle insurance, most Filipino homes remain unprotected against extreme weather events and natural disasters.

“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,” the OECD stated.

Currently, mandatory coverage in the Philippines is largely limited to mortgaged properties. This leaves a substantial proportion of households exposed, particularly those in low-income and disaster-prone areas. The OECD noted that only a small fraction of Filipinos hold home insurance, with even fewer policies covering natural hazards such as typhoons, floods, or earthquakes.

To address these vulnerabilities, the OECD recommended introducing mandatory home insurance for businesses, which could serve as a stepping stone to broader coverage. According to the organisation, such a measure would increase risk dispersion, reduce premiums, and enhance financial resilience.

“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 OECD said.

The report also advocated for the expansion of public–private partnerships (PPPs) to promote reinsurance markets and facilitate affordable coverage for vulnerable populations. In addition, the OECD suggested pairing mandatory insurance with targeted premium subsidies for low-income households through a dedicated fund, ensuring that protection remains accessible to all.

Insurance Coverage Gaps in the Philippines

The OECD report emphasises that expanding property insurance is particularly urgent given the heightened vulnerability of low-income households to property losses. With climate risks intensifying, comprehensive insurance reform could provide a critical safety net, fostering resilience across communities and businesses alike.