By Vonn Andrei E. Villamiel
THE Department of Agriculture (DA), with support from the World Bank, is setting up the country’s first agricultural co-insurance pool to expand private sector participation in agricultural insurance and improve coverage for semi-commercial and commercial farmers.
The planned co-insurance pool is part of an $870-million World Bank-supported program that aims to increase access to credit and insurance for farmers, fisherfolk, and agri-micro, small and medium enterprises (MSMEs) in the Philippines.
“The DA wants to encourage private insurers to engage in agricultural insurance,” Israel Q. Dela Cruz, business development and marketing department manager at the Philippine Crop Insurance Corp. (PCIC), told BusinessWorld in an interview.
“At the moment, PCIC is the only main agricultural insurer, along with two other private insurers,” he added.
The proposed co-insurance pool will allow private insurers and the PCIC to jointly offer standardized insurance products while sharing risks and operating costs through a common platform.
The program is modeled after agricultural insurance pool schemes such as Spain’s Agroseguro and Turkey’s Agricultural Insurance Pool or TARSİM, but PCIC said the Philippine version will not operate as a separate legal entity and instead function as a coordinating mechanism.
The DA is expecting at least five private insurers to join the program, although more than 10 companies have already expressed interest during consultations, Mr. Dela Cruz said.
The co-insurance program aims to benefit around 750,000 farmers by the time it concludes in 2030. It will be funded through $70 million in World Bank loan proceeds over five years.
Part of the funding will be allocated to a “first loss” facility to absorb early claims and reduce private insurers’ risk exposure as they enter the sector.
“That means if there are payouts in the first year, they will be covered by the program. Of course, private insurers tend to hesitate, especially in the agricultural insurance business, because they may fear having to pay out large claims right away,” Mr. Dela Cruz said.
A portion of the budget will also cover partial premium subsidies for selected farmer segments and startup and operating costs.
Meanwhile, Mr. Dela Cruz said a pool manager will be selected to oversee the scheme’s operations, including supervising a technical support unit that will handle underwriting, marketing, claims assessment, financial management, and organizational functions.
“Options currently being explored for the pool manager include the National Reinsurance Corp., PCIC, or a private sector insurer,” the World Bank said in an earlier project document.
Personnel from the PCIC and participating private insurers are expected to be assigned to the technical support unit, which will serve as the operational arm of the pool.
The DA is also setting up an agri-risk management office that will study appropriate subsidy levels and guide risk analysis for the program, including determining how much premium support may be provided to eligible farmer segments.
Mr. Dela Cruz said preparatory work is ongoing, including drafting product designs, forming committees, and preparing terms of reference, but full implementation will depend on the approval of the program loan.
“Since it’s a program loan, it has to be approved by the Department of Economy, Planning, and Development. Only then can we start the project,” he said.
Mr. Dela Cruz said the government is targeting approval around June or July, with operations expected to begin soon after.
