Finance Secretary Carlos Dominguez III has underscored the need for the Philippine Crop Insurance Corp. (PCIC) to be run by industry professionals to stanch its financial hemorrhage and let it provide Filipino farmers with better protection against economic losses.

During the first organizational meeting of the reconstituted PCIC Board on Friday morning, the members formalized the election of Dominguez as its chairman, and of Agriculture Secretary William Dar as its vice chairman.

The Board also appointed lawyer Joyce Briones of the DOF Legal Affairs Office as the new Corporate Secretary of the PCIC.

PCIC president Jovy Bernabe; Land Bank of the Philippines (LANDBANK) president-CEO Cecilia Borromeo; and Government Service Insurance System (GSIS) president and general manager Rolando Macasaet were named members of the new Board.

The Board has yet to appoint one representative each from the private insurance industry, and the subsistence farmers’ sector (preferably representing agrarian reform beneficiaries/cooperatives/associations) as Board members.

“This Board’s most immediate tasks are to reorganize the PCIC, stop its financial bleeding, and deliver better insurance coverage to Filipino farmers. It needs to expand the assets and crops that the PCIC covers, and to transform this agency into a viable instrument reinforcing our risk mitigation and resilience efforts,” Dominguez said during the virtual meeting.

Dominguez said the PCIC should study the possibility of engaging in reinsurance and encouraging more private companies to offer agricultural insurance products, so that farmers can benefit from the efficiency in services that these firms offer.

The PCIC should likewise consider other types of insurance programs implemented in other countries, such as the index-based or parametric insurance to substantially mitigate the economic losses of farmers from calamities intensified by climate change, said Dominguez who is also chairman-designate of the Climate Change Commission (CCC).

Dominguez, who was agriculture secretary during the administration of the late President Corazon Aquino, said the PCIC likewise needs to expand its insurance coverage to include more crops to protect more farmers from financial losses resulting from bad weather, droughts, floods, or other calamities.

Dominguez said the PCIC Board should immediately formulate the corporation’s insurance blueprint for the next three years with clear monitoring and evaluation methods.

“This is our urgent mission that will test our imagination, our skills, and our management abilities. By working together, I am sure we can overcome this challenge and achieve our objectives,” he said.

He pointed out that the PCIC has been heavily reliant on substantial subsidies from the national government for the past 20 years.

During this period, the government has extended over P23.3 billion in subsidies through the national budget and pumped in an additional P5.3 billion into the PCIC from the Agri-Agra Fund since 2015, Dominguez noted.

For 2022, the proposed subsidy to the PCIC amounts to P4.5 billion.

“This trend is not sustainable,” Dominguez said. “As directors, we have to ensure that our stakeholders will get the most value for the money from the insurance premium subsidy which the PCIC receives from the national government. We have to utilize each taxpayer’s peso efficiently for the agriculture sector’s benefit.”

He said running the PCIC will require a new business model and the most competent management to ensure that its operations remain sustainable, if not totally subsidy-free.

To address the PCIC’s urgent concerns, “the PCIC must be run by insurance industry professionals and guided by the best actuarial advice,” Dominguez said.

The PCIC should engage the services of an Insurance Commission (IC)-accredited actuary in performing the valuation of its actuarial reserve liabilities, Dominguez said.

Dominguez pointed out that the PCIC should provide increased insurance coverage to farmers with lower premiums, while determining how much the government is losing because of the lack of adequate insurance coverage in the agricultural sector.

“I trust this Board will find the path to sustainability. Our farmers face the increasing likelihood of suffering losses due to severe and erratic weather events caused by climate change. Crop insurance is an effective instrument to mitigate dislocation and economic losses. The PCIC must be there to extend the widest coverage possible,” Dominguez said.

Executive Order (EO) No. 148 issued by President Duterte last week reorganized the board of directors of the PCIC and transferred its agency attachment from the Department of Agriculture (DA) to the Department of Finance (DOF) “to ensure that its operations are rationalized and monitored centrally in order that government assets and resources are used effectively, and the government’s exposure to all forms of liabilities, including subsidies is warranted and incurred through prudent measures.”

During the meeting, the members designated their alternates to the Board. National Treasurer Rosalia de Leon is Dominguez’s alternate to the Board, while DA Undersecretary for Policy and Planning Fermin Adriano is Dar’s alternate.

Dominguez said he has so far had three meetings with IC and PCIC officials to look into the operations of the latter.

Such meetings were held to also monitor the PCIC’s implementation of the IC’s recommendations on how the corporation can improve its operations.

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