The Insurance Commission (IC) lauded the state-owned Philippine Crop Insurance Corp. (PCIC) and CARD Pioneer Microinsurance, Inc. (CPMI) for an agreement on agriculture insurance.
In a statement, Insurance Commissioner Dennis B. Funa said the co-insurance agreement between PCIC and CPMI would help address the protection gap in the agricultural sector exposed to severe and frequent disasters.
Previously, the PCIC has solely provided multi-peril crop insurance for various types of agricultural commodities and the government has subsidized insurance premiums for the benefit of small farmers in the country.
“Despite this, insurance coverage among farmers in the Philippines is still low. Clearly, there is a need to address the protection gap in the agricultural sector, considering its exposure to severe and frequent disasters,” Funa said.
“Thus, I am very much delighted and excited with this public-private sector initiative, which really is the first of its kind. The Insurance Commission (IC) is confident that this co-insurance agreement will kindle the expansion of agriculture insurance in the country,” he added.
Signed on Thursday, Feb. 3, the agreement provides PCIC and CPMI to share the risks underwritten for each insurance policy in the ratio of 70:30. CPMI will be the lead insurer and PCIC will be the co-insurer under the arrangement.
Also, CPMI will offer PCIC’s agriculture insurance products to farmers using its network of distribution channels.
In addition, PCIC will provide capacity-building support to CPMI in the areas of underwriting, policy administration, actuarial matters, and claims management.
Meanwhile, CPMI will attempt to increase agricultural insurance penetration by focusing on high-value crops in selected regions where PCIC has limited coverage.
To recall, the Asian Development Bank (ADB) conducted in 2018 a roundtable discussion on the interest and potential role of the private sector in agriculture insurance under the Financial Inclusion Strengthening Framework Technical Assistance project (TA 9166 PH).
As a result of the discussions, the IC spearheaded the creation of a cross-sectoral technical working group that led to CPMI indicating interest to partner with PCIC.
In 2020, talks between CPMI and PCIC on the potential co-insurance agreement ensued; and the parties have now finalized the terms and conditions of their agreement.