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 signed a co-insurance deal with CARD Pioneer Microinsurance (CPMI) to share the risks underwritten for each insurance policy at a ratio of 70:30, reported The Philippine Star.
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 PCIC's insurance plans to farmers.
Under the agreement, PCIC will also 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.
Protection gap in agriculture
Mr Funa said, “In past years, the PCIC has solely provided multi-peril crop insurance for various types of agricultural commodities and the government has subsidised insurance premiums to 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.”
Finance officials have previously flagged the PCIC for its impending collapse due to its reliance on state subsidies in pursuing its mandate.