DOF eyes private sector role in crop reinsurance
The Department of Finance (DOF) is no longer keen on privatizing the Philippine Crop Insurance Corp. (PCIC) but it said it is mulling over involving the private sector for reinsurance.
Days after President Duterte signed Executive Order (EO) 148 transferring the PCIC from the Department of Agriculture (DA) to the Department of Finance (DOF), Finance Secretary and now PCIC Board Chair Carlos G. Dominguez III said the privatization of PCIC is currently not on the table.
“Privatization of PCIC is not being considered to this time. However involving the private sector through tools such as reinsurance of agriculture risks will be explored,” Dominguez told reporters last Sunday.
He believes involving the private sector in reinsurance would bode well for farmers.
“Re-insurance will most likely allow the expansion of coverage to more farmers; and more crops and livestock.”
Finance Undersecretary Gil S. Beltran has said two years ago that the government has the option to either privatize the PCIC or transform the state-run firm into an entity that offers reinsurance.
However, Dominguez said private sector involvement in reinsurance would have yet to be decided by the reorganized PCIC Board.
“This will be determined by the reconstituted Board of Directors which now includes the president of the GSIS [Government Service Insurance System] and a representative of the private insurance industry,” he said.
EO 148 mandates the Secretary of Finance to nominate the representative from the private insurance industry in the PCIC Board.
The reorganized PCIC Board will also have the Secretary of the Department of Agriculture (DA) as its vice-chairman while its other members include the president of the PCIC, the president of the Land Bank of the Philippines and representative from the “subsistence” farmers’ sector. The latter is preferred to be representing agrarian reform beneficiaries and/or cooperatives and/or associations, who shall be selected and nominated by the different farmers’ organizations and/or cooperatives.
The transfer of the PCIC and the reorganization of its BOD were based on the recommendation of the DOF, DA and the Governance Commission for government-owned and controlled corporations to “ensure that the operations of PCIC 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.”
But PCIC’s transfer did not sit well with the Federation of Free Farmers (FFF) who lamented the lack of consultation with farmers and concerned stakeholders. Apart from this, they also said the transfer resulted in the reduction in the number of seats for farmer representatives in the PCIC board to just one from three.
The FFF expressed worries that the transfer of PCIC to the DOF would change the priorities of the state insurance firm toward “fiscal and monetary concerns” that may not be supportive of the needs of the farmers.