Expand Agri-Insurance in PH thru PCIC-LGU Partnerships – PIDS study

An innovative way to promote agricultural insurance nationwide is to strengthen the linkage between local government units (LGUs) and the Philippine Crop Insurance Corporation (PCIC), the government’s insurance provider for farmers, says state think tank Philippine Institute for Development Studies (PIDS).

According to PIDS Research Fellow Celia Reyes and Research Associates Adrian Agbon, Christian Mina, and Reneli Ann Gloria, the collaboration between PCIC and LGUs can increase the penetration rate of agricultural insurance among farmers.

“To date, only 14 LGUs across the country has an existing partnership with the PCIC, which include Isabela, Tarlac, Pampanga, Quezon, Camarines Sur, Albay, Palawan, Capiz, Guimaras, Negros Occidental, Cebu, Bohol, Agusan del Norte and Davao del Norte,” the authors disclosed.

To gain a better understanding of the implementation of the existing agricultural insurance programs of LGUs with PCIC, the PIDS research team covered the provinces of Isabela, Cebu, Negros Oriental, and Davao del Norte in their study.

The results showed that providing a premium subsidy resulted in increased enrollment of rice and corn farmers in each province.

Data collected from the study also revealed that the common goal of the insurance program in the four LGUs is to increase agricultural productivity.

Two LGUs, Davao del Norte and Cebu, explicitly mentioned that the compelling reason for the provision of agriculture insurance in their LGU is climate change, while Isabela and Negros Occidental included a health component in their insurance program aside from the product and crop insurance coverage.

“We observed that Isabela has a unique feature in its agriculture insurance program as it included scholarships, which to our view, is an improvement in the long-term human capital among children of farmer and fisherfolk,” the researchers shared.

The research also tackled the different modalities of the four LGUs in providing agricultural insurance. Cebu and Isabela provinces offer full premium subsidy to eligible farmers and fisherfolk unlike Negros Occidental that provides loan to eligible farmers, which is equivalent to 25 percent of the total premium. With this arrangement, a farmer has to pay a certain amount upon enrolment depending on the product line, while the remaining amount will be shouldered by the province, to be paid by the farmer after harvest time.

In Davao del Norte, the provincial government and the farmer share the payment of the premium. The farmer pays 25 percent of the total premium while the provincial government bears the 25 percent and the 50 percent is the subsidy from the national government.

“Various modalities in the sharing schemes among the national government, LGUs, and the farmers are crucial in the sustainability of the program. As to which program is better to replicate, the PIDS team still needs to study more the financial viability of each LGU program,” the authors explained.

The PIDS team proposed that the PCIC should continue to partner with LGUs with the latter providing partial or full subsidy for insurance premium in order to expand coverage and increase the penetration rate among farmers and other target recipients in LGUs.

They also encouraged local governments to require farmers to get agricultural insurance. They also posed the need to clarify the targeting mechanisms as to who shall be given full or partial subsidy by the local and national governments, and to identify groups for insurance coverage in order to maximize subsidies in LGUs. (PIDS)