Congress is targeting to enact into law a measure that would provide farmers with free index-based crop insurance before the end of the year, according to the chairman of the Senate Committee on Agriculture and Food.
Sen. Cynthia A. Villar, the committee chairman, said weather-based crop insurance would afford farmers a “more convenient way” of receiving indemnity in times of disaster.
“We like this [measure] because the money will come from our fund for calamity. Instead of giving funds for calamity, we will just give farmers climate-based crop insurance,” Villar told reporters in a recent interview.
“So if they are affected by a calamity, they will just claim [their indemnity] from the insurance company. The government will shoulder the premium. We are hoping to cover all crops,” she added.
On March 20 Villar filed Senate Bill (SB) 1759, or the “Free Index-Based Crop Insurance Act of 2017,” which seeks to establish a free index-based crop insurance (Fibci) framework in the Philippines.
Under the bill, a Fibci framework would allow private insurance companies to implement a weather index-based insurance product.
The parameters for an agreed weather reference index would include but not limited to: rainfall, wind speed and temperature. A trigger or threshold reference point shall be set for each parameter.
Once the trigger is breached, the insurance provider obligates itself to indemnify the insured farmers, according to the bill.
A Fibci Program Management Office under the Office of the President would be created “that would focus on establishing the needed coordination mechanisms to implement the program, and popularizing farmers’ regular use of weather index-based crop insurance.”
The bill is proposing to allocate at least P5.8 billion for the Fibci, which would be initially sourced from the government’s risk management fund. The initial amount would cover at least 2.8 million hectares of rice lands, according to SB 1759.
Villar said the program would be opened to the private sector to “promote competition.”
“Six companies have already expressed their interests to participate [in the program]. We are looking for insurance companies that can do agricultural insurance,” she said.
A similar bill has been filed by Rep. Arthur C. Yap of the Third District of Bohol in the House of Representatives, which has already hurdled the third reading in February.
House Bill 6923 calls for an overhaul of the crop-insurance system of the Philippines by allowing index-based direct insurance and reinsurance.
Yap noted that the Philippines needs a law strengthening the Philippine Crop Insurance Corp. (PCIC) because the country’s farm sector is vulnerable to climate change.
The PCIC’s coverage, he added, should be expanded to allow the agency to be engaged in index-based insurance and reinsurance.
“We will go to a bicameral conference should there be conflict [in provisions]. We will see,”
Villar said.