Finance Secretary Carlos G. Dominguez III instructed the Philippine Crop Insurance Corp. (PCIC) to identify and explain its sources of funds and corresponding uses to better understand its financial status and ensure that its premium subsidies paid for by taxpayers are spent well.

Dominguez said during the state-run firm's recent Board of Directors meeting that it should recast the presentation of its financial position to reflect his instructions, given that the corporation has yet to adopt the Philippine Financial Reporting Standards (PFRS) 4 for insurance contracts.

PCIC President Jovy Bernabe said the state-run firm will start presenting in PFRS 4 format its financial statement as of August 2021 at the latest, and will revisit its financial reports for 2019 and 2020 to follow this standard, which is required for all insurance ompanies.

Dominguez said during the meeting that the PCIC should have submitted its restated financial statement for 2020 based on the PFRS 4 by Nov. 4.

“What we want, the objective of this whole exercise, is we want to make sure that the taxpayer is getting value for his money, that we are doing everything the right way,” Dominguez, who chairs the PCIC Board, said during a recent meeting.

Dominguez made it clear that the government has no intention of reducing the premium subsidies being extended to the PCIC, but such funds should be used efficiently, which is why the board wants to examine the firm’s expenditures.

During the meeting, Dominguez also directed the PCIC to act on the recommendation of the Insurance Commission (IC) by March next year to revisit the corporation’s Risk Premium Rate (RPR) assumptions used in pricing the products.

He said the PCIC should develop a Product Governance Framework and hire a consultant with an extensive background in agricultural insurance.

The PCIC should also study the proposals of the National Reinsurance Corp. of the Philippines (NatRe) to engage in reinsurance coverage, Dominguez said.

He also directed the PCIC to find out whether other countries, such as the Philippines’ fellow members in ASEAN provide insurance coverage against losses due to pests and diseases, or if they only provide insurance coverage against losses due to catastrophes or natural causes.

Dominguez noted that the PCIC’s process of determining losses from pests and diseases should be reviewed thoroughly to avoid this type of insurance coverage from being a source of fraud and fund leakages.

During the same meeting, the PCIC Board also approved the process and timelines for the nomination and selection of its subsistence farmers’ representative to the Board.

The Board agreed that the Department of Agriculture (DA) will be the lead facilitator, while the PCIC will be the co-lead facilitator of the nomination and selection process for the farmers’ representative, which should have been completed on Nov. 15 at the latest.

Under this process, qualified farmer’s organizations and/or cooperatives may submit nominees to a nomination and screening committee to be led by the DA’s Provincial Office.

The qualifications of both the nominees and the nomination organization or cooperative will be validated by the DA and the PCIC.

The PCIC Board will submit a shortlist of 4 nominees to the Office of the President (OP), and based on this list, the President will appoint one subsistence farmers' representative to the PCIC Board of Directors.

Implementing guidelines on the nomination and selection process will be issued and published in the PCIC website, its social media sites and at the DA and PCIC regional offices.