State-owned Philippine Crop Insurance Corp. (PCIC) needs to be run by “industry professionals” to stop the company’s money losing business, the government’s chief economic manager said.
Finance Secretary Carlos G. Dominguez III, who officially took over the chairmanship of PCIC on Friday, Sept. 24, said there is an immediate need to reorganize the government-run crop insurer.
Dominguez explained that running the PCIC now requires a new business model and the most competent management to ensure its operations remain sustainable, if not totally subsidy-free from the government.
The PCIC has been heavily reliant on substantial state subsidies for the past 20-years, totaling over P23.3 billion. The government also pumped in P5.3 billion into the company from the Agri-Agra Fund since 2015.
For 2022, the proposed subsidy to the PCIC amounts to P4.5 billion.
To address the PCIC’s urgent concerns, Dominguez said “the PCIC must be run by insurance industry professionals and guided by the best actuarial advice.”
For this reason, Dominguez suggested that PCIC should engage the services of an Insurance Commission-accredited actuary in performing the valuation of its actuarial reserve liabilities.
The PCIC should “stop its financial bleeding, and deliver better insurance coverage to Filipino farmers,” said Dominguez, who is also agriculture secretary during the term of former President Cory Aquino.
“It needs to expand the assets and crops that the PCIC covers, and to transform this agency into a viable instrument reinforcing our risk mitigation and resilience efforts,” Dominguez said.
Dominguez added that the PCIC should study the possibility of engaging in reinsurance and encouraging more private companies to offer agricultural insurance products, so that farmers can benefit from the efficiency in services that these firms offer.
Moreover, the PCIC should consider other types of insurance programs implemented in other countries, such as the index-based or parametric insurance to substantially mitigate the economic losses of farmers from calamities intensified by climate change, he said.
Dominguez said the PCIC needs to expand its insurance coverage to include more crops to protect more farmers from financial losses resulting from bad weather, droughts, floods, or other calamities.
During the first organizational meeting of the reconstituted PCIC Board, Dominguez tasked the body to immediately formulate the corporation’s insurance blueprint for the next three years with clear monitoring and evaluation methods.
“This is our urgent mission that will test our imagination, our skills, and our management abilities. By working together, I am sure we can overcome this challenge and achieve our objectives,” Dominguez said.
Earlier, President Duterte issued Executive Order No. 148 that reorganized the board of directors of the PCIC and transferred its agency attachment from the Department of Agriculture to the Department of Finance.
According to the EC, this is “to ensure that its operations are rationalized and monitored centrally in order that government assets and resources are used effectively, and the government’s exposure to all forms of liabilities, including subsidies is warranted and incurred through prudent measures.”