Opening a new frontier: Why PH nonlife insurance industry should embrace agriculture

THE invitation to the private nonlife insurance industry to join what has been a historically government-dominated terrain of agricultural risk is not just timely — it is essential. In the Philippines, the agricultural insurance sector has long been shouldered by the Philippine Crop Insurance Corp. (PCIC). But the government’s recent move to open the field to private insurers signals a paradigm shift — one that offers industry, farmers and the nation alike a meaningful chance to partner in resilience, modernization and inclusive growth.

Agriculture in the Philippines is far more than planting rice or corn. It spans high‐value crops, poultry and livestock, fisheries and aquaculture, even forestry and forest products. And it reaches beyond primary production: planting, harvesting, storage, processing, packaging, logistics and market distribution. All these elements of the value chain carry risk — and each one is an opportunity for innovative coverage and deeper private sector involvement. The literature shows that agricultural insurance should cover not only weather, pests and diseases, but also price volatility, input disruptions, labor or institutional risks.

Given this breadth, the opening of private-sector participation is welcome. PCIC, though an indispensable institution, cannot alone reach the magnitude and diversity of risks across the sector. One recent study points out that PCIC “has limited resources to provide insurance protection to the more than 50 percent of the Philippine population involved in agriculture, fisheries and forestry activities.” In short: private nonlife insurers bring underwriting capacity, product innovation, distribution reach and, crucially, access to reinsurance markets.

By showing up in this space, the nonlife insurance industry can help de-risk the agricultural sector. This is not just jargon: risk reduction implies that farmers, fisherfolk and agribusinesses can obtain confidence, credit and investment. When insurance is credible, it becomes an enabler of financing. A recent review cites how crop insurance “facilitates credit access especially in formal lending institutions like the Land Bank of the Philippines.” That matters in a country where agriculture employs a large share of the workforce, yet receives only a meager proportion of formal loans — despite its critical role in food supply and exports.

In stepping into agricultural insurance, nonlife insurers will become key partners in the modernization of Philippine agriculture. Insurance coverage stimulates investment in mechanization, technology, good agricultural practices and supply chain upgrades — because the commercial risk becomes more manageable. Yet beyond investment, there is a national imperative: resilience. The Philippines is among the world’s most climate-vulnerable nations, facing typhoons, floods, droughts, pest invasions, and more. Insurance is not the whole answer, but it is a vital part of the toolkit — helping guard against catastrophic losses, stabilizing incomes, preventing debt traps, and thus protecting food security.

From a regulatory and market-development perspective, the time is ripe. Inclusive reforms have been under way. For example, the government has advanced legislation (e.g., the pending House Bill 7387) that would expand PCIC’s mandate and encourage private-sector participation. The Insurance Commission has published guidelines for a regulatory sandbox allowing commercial insurers to underwrite agricultural risk in collaboration with PCIC. And the World Bank, via its policy note, emphasizes three stumbling blocks: product relevance, operations and institutional environment — each of which private insurers are well-placed to address.

Given this backdrop, what does private nonlife insurance participation look like in practice? First, product innovation. Index-based insurance (weather, area yield) that reduces cost of claims assessment and speeds payout is an emerging frontier in the Philippines. Private insurers can partner with PCIC and crop/fisher research institutions to co-develop these products. Second, diversification of lines: beyond staple crops to include aquaculture, livestock, high-value crops, forestry, storage assets, transport logistics and market linkages. Third, leveraging data and technology: remote sensing, satellite weather data, crop modelling all enhance risk assessment. Fourth, credit linkages: insurers can collaborate with banks to structure bundled finance-plus-insurance offerings that unlock capital for modernization.

For nonlife insurers, this is a growth opportunity aligned with national impact. Agriculture expands the business horizon beyond traditional motor, fire and liability lines. As the sector scales and modernizes, the market for risk-transfer will grow. And from a corporate-citizenship perspective, insurers become partners in our national agenda: climate adaptation, food security, rural development and inclusive economic growth.

Of course, there are challenges. Penetration today remains low: one estimate indicates that two-thirds of the country’s farmers are unprotected. Premium subsidies must be directed effectively, operations must improve (paper-based to digital), data infrastructure must be strengthened. But these challenges represent opportunity — opportunities for insurers to lead, not wait. The collaborative model — public-private partnerships — has been shown in other countries to scale effectively.

In conclusion: the initiative of the Philippine nonlife insurance industry to enter the agricultural insurance space is more than a business expansion. It is an investment in national resilience, in the livelihoods of farmers, in modernizing a core sector of the economy and in protecting our food supply for generations. With the support of PCIC, the World Bank, and global reinsurers and insurance partners, this “new frontier” is ready to be explored. The industry has the expertise, the tools and now the regulatory openness to make a meaningful difference. I believe strongly that we must seize this moment — not only to grow our portfolios but to grow the Philippines.

Source: www.manilatimes.net