PCIC, CPMI forge co-insurance deal

MANILA, Philippines — State-run Philippine Crop Insurance Corp. (PCIC) has entered into its first-ever agreement with a private firm to insure farmers and their yields and reduce its risk exposure that could result in its financial collapse.

The PCIC yesterday signed a co-insurance deal with CARD Pioneer Microinsurance Inc. (CPMI) to share the risks underwritten for each insurance policy at a ratio of 70:30.

Under the arrangement, CPMI will serve as the lead insurer, while the PCIC will stand in as the co-insurer, as the private entity will market the state-owned firm’s insurance products to farmers using its distribution network.

The partnership also tasks the PCIC to provide technical support to CPMI on actuarial matters, claims management, policy administration and risk underwriting.

The microinsurance firm will focus on insuring high-value crops in select provinces where the PCIC has failed to expand its coverage to. As such, the agreement is seen to benefit farmers in far-flung areas who require insurance money to rebuild in times of calamity.

Insurance Commissioner Dennis Funa said he expects the public-private partnership to contribute to the government’s target to raise insurance coverage among farmers in the countryside.

Funa said the previous years saw the government funding the PCIC through subsidies to insure farmers and their crops, but falling short of its goal to raise insurance penetration in the sector.

“During the past years, the PCIC has solely provided multi-peril crop insurance for various types of agricultural commodities and government has subsidized insurance premiums for the benefit of small farmers in the country,” Funa said.

“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,” he said.

Finance officials earlier flagged the PCIC for its impending collapse due to its reliance on state subsidies in pursuing its mandate. Last year, Funa said the bulk of PCIC’s assets, at about 40 percent, revolves on cash in banks and time deposits, exposing it to financial instability on the lack of investment income to fund its programs and projects.

Funa warned that taxpayers would be pushed to shoulder additional costs the PCIC may incur in the event that disasters hit its clients and they file for claims.