The House Committee on Economic Affairs seeks to strengthen the Philippine Crop Insurance Corp. (PCIC) by expanding its coverage and allowing it to engage in index-based insurance and reinsurance. In House Bill (HB) 6923, Rep. Arthur C. Yap of the Third District of Bohol, panel chairman, seeks to overhaul of the crop-insurance system in the Philippines by allowing the agency to provide index-based direct insurance and reinsurance policies. “With no real and expansive agricultural, property or life-insurance protection, farmers just watch helplessly, as the weather comes to take away the sweat and tears of investments that farmers have planted,” he said. Such a mandate was also seen encouraging  private insurers to offer index-based insurance as one of their products, as well. Index-based insurance is an innovative and technically sound approach to manage risks, especially for the poor and highly vulnerable farmers in the countryside, Yap said. “Unlike traditional crop insurance, in which indemnity payments are linked to individual farmer yields and losses, index insurance links payments to independently established data, such as local rainfall, wind speed, temperature, typhoons, cyclones and historical yield data as trigger events to release payments and compensation to affected farmers and fisherfolks,” according to Yap. The measure seeks to expand the type of crops that can be insured from rice only to include corn, high-value commercial crops, livestock, aquaculture and fishery, agro-forestry and forest plantations. It also requires farmers obtaining production loans for rice and other crops essential to food security to insure their crops with the PCIC. The bill also authorizes the PCIC to extend life and accident insurance cover for farmers and fisherfolk. It mandates the PCIC to insure properties and facilities of the government used in agro-fishery projects, including reinsurance cover to agro-fishery and forestry properties underwritten by private and government insurance companies. The plan is to offer weather index-based insurance, specifically for excessive or insufficient rainfall. The bill also allows the PCIC to offer crop reinsurance to encourage private commercial banks to sell crop insurance. The measure also increases the authorized capital stock of PCIC from P2 billion to P10 billion. It also increases the penalty against persons who institute spurious crop-insurance claims or allow others to do so. According to Yap, millions of farmers are just exposed to the ravages of climate change. “As constant casualties of climate change, farmers need not wait for total wipeout of their resources after every calamity before getting rescued by the government,” he said. “The ability to pay out cash early, at different stages of an unfolding calamity, without having to wait for a total wipeout, is what will give our farmers and our vulnerable poor the chance to save what they can and prevent more losses and damage,” Yap added. In Africa Yap said, insurance payouts prevent farmers from selling their livestock and moving to cities. “By purchasing risk insurance, nations can now shift disaster risk and associated economic, social and medical costs away from local government units to the global capital market. In a case like this, the government can instead focus on disaster preparedness and a system for saving lives and distributing aid and payouts in times of calamities and disasters,” he said. Meanwhile, Yap urged the Senate to immediately file a counterpart to HB 6923 to allow the PCIC to engage in index-based reinsurance and insurance and to be recapitalized. “This move will clearly signal to the private sector and capital markets that the Philippines is serious about this program to help our farmers, and secure food production in our country. We must also do a good job to promote a buy-in into this project with the government, primarily the departments of Agriculture, Agrarian Reform, Environment and Natural Resources and Science and Technology-Philippine Atmospheric Geophysical and Astronomical Services, legislators, LGU heads, farm stakeholders, cooperatives and mainstream finance entities,” he said. Source - https://businessmirror.com.ph