Accounting of PCIC subsidies sought

MANILA, Philippines — State-run Philippine Crop Insurance Corp. (PCIC) has been ordered to fully account for the subsidies it gets from the national government to improve its financial health and operations.

Finance Secretary and PCIC board chairman Carlos Dominguez III yesterday asked the PCIC to identify where it uses the subsidies it gets from the state.

“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 said.

While Dominguez said the government would continue subsidizing the PCIC to help in its mandate to provide insurance to farmers and their crops against disaster losses, the agency needs to report its expenditures and compare it with firms engaged in similar trade.

Further, Dominguez directed the PCIC to act on the proposal filed by the Insurance Commission (IC) to review its assumption on risk premium rate in pricing its products and services.

The IC reported that the bulk of the PCIC’s assets, at about 40 percent, revolve on cash in banks and time deposits, exposing the crop insurer to financial imbalance on lack of investment income to bankroll its operations.

As such, the IC warned that taxpayers will end up paying for additional costs the PCIC may incur in the event calamities strike its clients and claim their insurance.

Aside from enhancing accounting practices, Dominguez told the PCIC to find out whether its Southeast Asian counterparts cover damage from diseases and pests, or if they only insure losses to natural causes like typhoons.

Meanwhile, the Department of Agriculture was tasked to facilitate the nomination and selection of a farmer representative in the PCIC board. Agricultural groups may submit their nominees to a screening committee from which the PCIC board will draw four names to be submitted to President Duterte for his decision.

PCIC president Jovy Bernabe, for his part, committed to report the PCIC’s contracts in the latest Philippine Financial Reporting Standards moving forward. He said the agency will retrieve its financial reports for 2019 and 2020 and adopt these into the new format.

Dominguez earlier said subsidies extended to the PCIC in the past two decades reached P28.8 billion, the bulk of which, at P23.3 billion, came from the national budget, while the other P5.3 billion originated from loan penalties collected from banks.