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July 21, 2024

DOF places PCIC under the supervision of Insurance Commission

The Department of Finance (DOF) has placed the Philippine Crop Insurance Corp. (PCIC) under the supervision of the Insurance Commission (IC) to empower the latter to regularly examine the financial affairs, condition, and method of business of the state-run agricultural insurance firm.

With Department Order No. 038.2022 signed on June 28, outgoing Finance Secretary Carlos Dominguez III said the results of the examination conducted on the PCIC “shall be submitted by the IC to the DOF.

In September last year, President Duterte issued Executive Order (EO) No. 148 transferring the PCIC from the Department of Agriculture (DA) to the DOF as an attached agency “for policy and program coordination and general supervision.”

The PCIC Board was also reorganized under EO 148 with the DOF Secretary as chairperson.

Based on this presidential directive and under Section 253 of the Insurance Code, as amended, which mandates the IC to conduct an examination into the affairs, financial condition and method of business of government-owned and -controlled corporations (GOCCs) engaged in social or private insurance, Dominguez placed the PCIC under the regulatory oversight of the IC.

“In view of the foregoing, the PCIC is hereby placed under the supervision of the IC. The IC is hereby directed to conduct an examination into the affairs, financial condition, and method of business of the PCIC every three years, or as often as may be directed by the Insurance Commissioner or the Secretary of Finance,” Dominguez said.

Earlier, a World Bank (WB) study recommending reforms in the PCIC found that the state-run firm’s current approach to agricultural insurance neither provides value for money to taxpayers nor adequate protection to farmers.

The PCIC is also “very exposed to catastrophe losses which are not reinsured,” said the study done by a team from the WB’s Disaster Risk Financing and Insurance Program (DRFIP).

This study, which was presented recently to the PCIC Board, revealed that while premium subsidies given by the government to the PCIC grew rapidly over the years, agricultural insurance has only reached one-third of the country’s farmers and is not well-targeted to ensure that taxpayers are getting value for their money.

The study also found that PCIC’s premium rating, capital management, financial reporting, and other aspects of its operations are not in line with international best practices.

PCIC’s insurance products are also not suitable for majority of Filipino farmers, especially for small subsistence holders and growers, the study showed.