A LEGISLATOR said he wants the Philippine Crop Insurance Council (PCIC) to engage in reinsurance, open up to foreign investment, and become more data-driven.
“[B]ecause of climate change, we suffer from 20 tropical cyclones a year. Crop insurance is very important,” former Agriculture Secretary and Bohol 3rd District Representative Arthur C. Yap told reporters on the sidelines of the Sustainable Agriculture Forum at the SMX Aura Convention Center on Wednesday.
“We need a reinsurer which is why I filed a bill to amend the charter of the PCIC,” Mr. Yap added.
In September 2016, Mr. Yap filed House Bill No. 3560 mandating the PCIC to offer index-based insurance coverage and allow it to engage in reinsurance which is limited to index-based insurance contracts underwritten by private insurance firms.
While traditional crop insurance covers indemnity payments that use individual farmer yields and losses as parameters, payments under the new insurance solution can be released as soon as changes are found in independently established data such as local rainfall, temperature, wind speed, cyclones, typhoons, and historical yield as such events impact farm activities.
The bill also sought additional funding for the PCIC and authorizes the government-owned-and-controlled corporation to impose higher penalties on fraudulent claims.
“We need to fund PCIC and to make sure that money is only used for the intended purpose. We will design programs for that so the recapitalization of PCIC goes to reinsurance,” Mr. Yap said.
In this way, PCIC may have a viable asset standing which will attract giant insurance firms such as Europe-based firm insurers who have expressed interest to do business in the country, according to Mr. Yap.
“There are many reinsurance companies in Europe, Swiss Re and Munich Re, they want to enter the market, and they’ll need local partners,” he said.
Presidential Decree 1467 which established the PCIC charter tasked the agency to provide insurance protection to farmers against losses arising from natural disasters as well as plant diseases and pest infestation, initially for rice and later on to other crops.
All farmers obtaining production loans for palay, or unmilled rice, are required to participate in the supervised credit program while self-financed farmers will be given the option to place themselves under the supervision of agricultural production technicians.
Under the supervised credit program, a farmer agrees to apply proven farm practices necessary to conserve the land, improve its fertility and increase its production, and abide by the approved farm plan and budget agreed upon with a duly accredited supervised credit technician. — Janina C. Lim