FINANCE Secretary Carlos G. Dominguez III ordered the Philippine Crop Insurance Corp. (PCIC) to report on its financial condition and assess its contingent liabilities to the corporation’s newly-reorganized board on Oct. 7.
In a statement Sunday, Mr. Dominguez, the PCIC’s chairman, said he ordered the reports to help determine how the company will be managed under its reorganized board, as well as assess proposals for it to purchase reinsurance.
Mr. Dominguez is also expecting the PCIC to present its plans for expanding coverage to more crops, and exploring parametric insurance, which pays out based on the intensity of a trigger event.
The PCIC board conducted its first meeting late last month, and named coverage expansion its main priority, along with addressing the firm’s “unsustainable” finances.
Mr. Dominguez has said that the company relies heavily on subsidies and is due to receive P4.5 billion next year.
In a May 7 report, the Insurance Commission (IC) recommended that the PCIC review its overall risk management program by tapping reinsurance as a means of risk transfer.
The IC flagged the insurer’s vulnerability in the event of a major calamity.
“If the PCIC will continue this practice, the government is expected to infuse more capital for it to survive should there be large-scale losses which will affect most of its insured,” the regulator said in its report, which was made available to the public on Friday.
A separate study conducted by the Bureau of the Treasury (BTr) indicated that the PCIC has racked up operating costs in the last five years of P536.44 million.
Expenses for personnel services and maintenance and other operating expenses reported an average growth of 8% and 24%, respectively.
“For every peso income it generated (before subsidy), it is already spending an average of P0.71 (excluding direct costs and financial and non-cash expenses). Further, as compared to GSIS (Government Service Insurance System) and SSS (Social Security System) operating cost over its total expenses of 5%, PCIC is high at 15%,” the BTr said.
President Rodrigo R. Duterte signed Executive Order No. 148 on Sept. 14, which transferred oversight of the PCIC to the Department of Finance. — Beatrice M. Laforga