A lawmaker urged Congress to pass a measure that would amend the charter of the Philippine Crop Insurance Corp. (PCIC) so it could offer index-based insurance coverage and allow it to engage in reinsurance.
Rep. Arthur C. Yap of the Third District of Bohol said amending PCIC’s charter would also allow it to partner with top European reinsurance firms, which are keen on investing in the Philippines.
“Top reinsurance companies, such as Munich Re and Swiss Re, want to venture into agricultural reinsurance and are looking for a partner in the Philippines,” Yap told reporters on the sidelines of a forum organized by the European Chamber of Commerce of the Philippines on September 27.
According to the World Bank, reinsurance is a financial transaction by which risk is transferred from an insurance company to a reinsurance company in exchange of a payment (reinsurance premium).
Under House Bill (HB) 3560, which Yap filed in September last year, the PCIC would be allowed to engage in the business of reinsurance but only to cover index-based insurance contracts underwritten by private insurance companies.
Also, the bill would mandate the PCIC and encourage private insurance companies to offer index-based insurance as one of their products. Yap proposed the expansion of the insurance coverage of the PCIC to include high-value commercial crops, livestock, aquaculture and fishery products, agroforestry crops and forest plantations.
“Index insurance links payments to independently established data, such as local rainfall, wind speed, temperature, typhoons, cyclones and historical yield, as trigger events to release payments and compensation to affected farmers”, HB 3560 read.
Yap said he is hopeful that the bill would be passed by Congress next year.
“There is support for the measure in the lower chamber but we need more support in the Senate. It [reinsurance] may be a new concept in the Philippines, but it’s already being done in other parts of the world”, he said.
Yap added he has asked Sen. Cynthia A. Villar, chairman of the Senate Committee on Agriculture and Food, as well as Sens. Grace Poe, Sherwin T. Gatchalian and Juan Miguel
F. Zubiri to support the measure.
The lawmaker said there is a need to provide “innovative” crop-insurance products as the country’s agriculture sector is highly vulnerable to the unpredictability of nature.
“In 2013 the Philippines was once dubbed as the No. 1 country most impacted by climate change according to Germanwatch Global Climate Risk Index. Hence, as a country, we need to take necessary action in preparing for greater uncertainties and risks by climate change,” Yap said in HB 3560.
Jasper Y. Arcalas, Business Mirror
Photo from PCIC Website