Agency warns 7.8 quake to shake Philippine insurers in late 2026

The agency said losses may pass through local firms and global reinsurers.

The magnitude 7.8 earthquake that struck off the coast of Sarangani, Philippines is expected to result in limited damage and account for only a small share of total economic losses, reflecting the Philippines' ongoing catastrophe protection gap.

Victoria Ohorodnyk, senior director, analytics at AM Best's Singapore office, said insurers generally have less exposure in Mindanao than in the country's main commercial centres, such as Manila. 

She noted that many homes in the Philippines remain uninsured, which is likely to widen the difference between insured losses and the overall economic impact of the disaster.

Ohorodnyk added that Philippine insurers rely heavily on the global reinsurance market to transfer earthquake risks.

The event could lead reinsurers to reassess their earthquake models and risk appetite, although she does not expect a significant change in appetite for regions that were not affected by the quake in the short term.

In a commentary titled Mindanao Earthquake Expected to Impact Philippine Insurers’ Results in Second-Half 2026, AM Best said the full extent of insured losses is still being assessed and has not yet been quantified. 

However, it expects the domestic non-life insurance sector to absorb the initial layer of losses through a risk-sharing arrangement involving direct insurance policies and the Philippine Catastrophe Insurance Facility (PCIF), which was set up to pool catastrophe risks within the country.

The ratings agency said Philippine insurers remain heavily reliant on the global reinsurance market to transfer extreme earthquake risks, meaning international reinsurers are likely to absorb part of the insured losses. 

Although overall insured losses are expected to remain low, the event highlights the relationship between primary insurers and reinsurers in managing catastrophe risks.

Susan Tan, senior financial analyst at AM Best, said Philippine insurers have increased their retention of catastrophe risks in recent years as a way to balance rising reinsurance costs with profitability targets. 

She said this has increased insurers’ sensitivity to climate-related risks and exposed limitations in traditional risk models, potentially leading to greater underwriting volatility.

The comments came as the death toll from the earthquake rose to 37, according to the Office of Civil Defense (OCD).
OCD deputy spokesperson Diego Agustin Mariano said four deaths were recorded in Davao and 33 in SOCCSKSARGEN as of 6AM on Tuesday. The figures remain subject to validation.

The OCD said 18 deaths are being validated in Sarangani province, 12 in General Santos City and three in South Cotabato.

Earlier reports indicated that 144 people were injured and four were missing.

The earthquake struck at 7:37AM on Monday in the Celebes Sea. Initial assessments identified General Santos City as the worst-affected area.

As of 7AM on Tuesday, the Philippine Institute of Volcanology and Seismology had recorded 1,055 aftershocks, ranging in magnitude from 1.3 to 6.7.

The national government is working with local authorities in Sarangani to provide relief and assistance. The OCD said generators and fuel will be deployed to hospitals to help maintain medical services.