Billion to recapitalize PH Crop Insurance pushed

The R10-billion recapitalization of the Philippine Crop Insurance Corp. (PCIC) is now being pushed for in a bid to improve the profitability of the farmers by making them more qualified to better financing.

Congressman Arthur Yap, Economic Affairs Committee Chairman, said that with stronger and modern insurance system in the agriculture sector, banks would be more confident to lend to farmers.

The former Agriculture Secretary is now pushing for an act mandating the PCIC to offer index-based insurance coverage and allowing it to engage in reinsurance, increasing its funding source, and imposing heavier penalties on spurious claims.

"This bill aims to sustain the PCIC insurance coverage's funding requirements by increasing its authorized capital stock to R10 billion," Yap said.

Yap told reporters on the sidelines of ECCP Smart Agriculture Forum that as of now, the authorized capital stock of PCIC only stands at around R2 billion.

From 2010 to 2015, Philippine agriculture was subjected to average of 20 tropical cyclones per year averaging annual damages worth R30 billion. This amount is only confined to actual crop losses and does not include damages to agriculture infrastructure.

Last year, PCIC only paid a measly R1.3 billion in insurance but this merely covered crop losses.

"We are suffering R30 billion in crop losses every year and they paid way lesser than that that is why it's so impossible for farmers to get out of poverty," Yap said.

Yap then specified the need to mandate PCIC and encourage private insurance companies to offer based insurance as one of their products.

"There are instruments, products and measures that are science-based and can help address these losses and damages. Science-based solutions can usher in a new era of intensified agriculture production and provide a safety net for all farmers at the same time: here we refer to index based insurance for agriculture," Yap said.

"Unlike traditional crop insurance in which indemnity payments are linked to individual farmer yields and losses, index insurance links payment to independently established data such as local rainfall, wind speed, temperature, typhoons, cyclones, and historical yield data as trigger events to release payments and compensation to affected farmers and fisherfolk," he further explained.

Yap also wants to expand the insurance coverage of PCIC to include high value commercial crops, livestock, aquaculture and fishery products, agro forestry crops and forest plantations.

If approved, the composition of the board of directors of PCIC will also be amended in a way that it will include the Secretary of Agriculture and the Commissioner of Insurance Commission as its ex-officio members.