Finance Secretary Carlos Dominguez III ordered the management of the Philippine Crop Insurance Corp. to identify and explain its sources of funds and uses to better understand its financial status and ensure that its premium subsidies paid for by taxpayers are spent well.
Dominguez said during the state-run firm's recent board of directors meeting that it should recast the presentation of its financial position to reflect his instructions, given that the corporation has yet to adopt the Philippine Financial Reporting Standards 4 for insurance contracts.
PCIC president Jovy Bernabe said the state-run firm would start presenting in PFRS 4 format its financial statement as of August 2021 at the latest, and would revisit its financial reports for 2019 and 2020 to follow this standard, which is required for all insurance companies.
Dominguez said during the meeting that the PCIC should have submitted its restated financial statement for 2020 based on the PFRS 4 by Nov. 4.
“What we want, the objective of this whole exercise, is we want to make sure that the taxpayer is getting value for his money, that we are doing everything the right way,” Dominguez, who chairs the PCIC Board, said during the meeting.
Dominguez made it clear that the government has no intention of reducing the premium subsidies being extended to the PCIC, but such funds should be used efficiently, which is why the board wanted to examine the firm’s expenditures to compare these with those of other corporations engaged in insurance operations.
Dominguez also directed the PCIC to act on the recommendation of the Insurance Commission by March next year to revisit the corporation’s risk premium rate assumptions used in pricing the products, as these may be deemed “inadequate, unreasonable and inappropriate.”
He said the PCIC should also develop a product governance framework and hire a consultant with an extensive background in agricultural insurance.
The PCIC should also study the proposals of the National Reinsurance Corp. of the Philippines to engage in reinsurance coverage, he said.
He also directed the PCIC to find out whether other countries, such as the Philippines’ fellow members in the Association of Southeast Asian Nations, provide insurance coverage against losses due to pests and diseases, or if they only provide insurance coverage against losses due to catastrophes or natural causes.
Dominguez said the PCIC’s process of determining losses from pests and diseases should be reviewed thoroughly to avoid this type of insurance coverage from being a source of fraud and fund leakages.