The Philippines is planning to propose a mandatory insurance bill as the country is more prone to earth quakes due to its location on the Pacific Ring of Fire.

The proposal, which is backed by Asian Development Bank with a $70m loan, aims to make earthquake insurance mandatory and affordable for home owners and small firms.

Meanwhile, the country’s insurance regulator, Philippines Insurance Commission (PIC), has suggested to set up an earthquake insurance firm funded by the Philippines government.

PIC insurance commissioner Emmanuel Dooc was quoted by International Business Times as saying that the earthquake insurance firm will be like an ordinary insurance company, but will be a government and private sector joint collaboration.

"The company will manage the funds and risks, and will also disburse," Dooc added.

"We need the critical mass and unless we require the compulsory coverage, not very many will purchase this kind of policy."