Design Issues of the Philippine Agricultural Insurance Programs

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Several bills filed in the Philippine Congress have already proposed amendments in the charter of the Philippine Crop Insurance Corporation (PCIC) to improve its products and services. These proposals, however, do not cover key design issues that also merit the attention of policymakers. This Policy Note summarizes these design issues based on a PIDS study on agricultural insurance programs. The study finds, among others, that the PCIC insurance is serving more as a credit risk reduction tool by design than a risk mitigation tool. It also reveals that the amount of insurance cover is insufficient to cover the total cost of production inputs, at least for rice and corn. To address these issues, the study urges the PCIC to encourage farmers, particularly those financially able ones, to pay for an additional amount of cover for their insured commodities. It also recommends the strengthening of its partnership with local governments, which can provide additional financing to pay for the additional premium to increase insurance cover.