The Department of Finance (DOF) has asked the management of the state-run Philippine Crop Insurance Corp. (PCIC) to submit the detailed financial status and computation of its contingent liabilities.
In a statement, Finance Secretary Carlos G. Dominguez III said he asked the PCIC management to present its financial status and ideas before the government-owned firm’s newly reorganized board of directors on Thursday, Oct. 7.
The presentation should include an outline on how the PCIC should be managed and initial ideas about possible reinsurance coverage that the company can provide, Dominguez said.
The finance chief also wants the PCIC team to present possible expansion of its insurance coverage to include more crops, and how it can provide parametric insurance compared to its current policies.
Last week, the Insurance Commission warned that the PCIC is at risk of suffering heavy losses once major catastrophic events occur, noting that the company had a high net retention rate or number of policies currently on hand.
During the first meeting last Sept. 24 by the reconstituted PCIC board, Dominguez said among the immediate tasks of the body was to reorganize the corporation, stop its financial bleeding and determine how it can deliver better insurance coverage to Filipino farmers.
Dominguez, who now chairs the PCIC board, pointed out that the PCIC has been heavily reliant on substantial subsidies from the national government for two decades.
In the past 20 years, the government extended over P23.3 billion in subsidies and pumped in an additional P5.3 billion into the PCIC from the Agri-Agra Fund since 2015, Dominguez noted.
For 2022, the proposed subsidy to the PCIC amounts to P4.5 billion.
He said this “trend is not sustainable” and that the board should find ways to ensure that the PCIC’s primary stakeholders—the Filipino farmers—get the most value for their money from the insurance premium subsidy from the national government.
Thus, for the next board meeting, Dominguez asked the PCIC management “to give us a presentation on what is actually the financial status of the corporation” and its “computed contingent liabilities.”
The Government Service Insurance System (GSIS) suggested for PCIC to look into the possibility of adopting Philippine Financial Reporting Standards 4 covering insurance contracts so that the firm can properly prepare its financial statements.
During the Sept. 24 meeting, the Board appointed lawyer Joyce Briones of the DOF Legal Affairs Office as the new PCIC Corporate Secretary.
The new board is now composed of Dominguez as chairperson, Agriculture Secretary William Dar as vice chairperson. PCIC President Jovy Bernabe, Land Bank of the Philippines President-CEO Cecilia Borromeo and GSIS President Rolando Ledesma Macasaet as members.
Earlier, Dominguez said the PCIC should be run by “industry professionals” to stop its money losing business.