Las Piñas City Rep. Camille Villar wants crop insurance indexed to weather to shield small farmers from extreme weather emergencies.
She said that indexing the crop insurance to weather conditions would make the insurance coverage process and payment to farmer beneficiaries faster and with lesser-bred type compared to conventional crop insurance.
“Weather index-based crop insurance (WIBCI) is a unique insurance product based on the occurrence of breach of a weather-based parameter, which serves as legal proof of the occurrence of extremely adverse weather conditions and proxy for the expected crop damage,” said Villar in her House Bill 3310.
She said that the WIBCI is an innovation that requires less administrative costs in terms of selling the product, administering the policy coverage and monitoring over wide areas.
“It maximizes the use of relevant technologies and networks in order to reach out more and more farmers; and provides faster payout turn-around in the event of breach of the agreed parameters without need for bureaucratic processing by an adjuster. The hassle-free disbursement of claims is made possible through the use of technology and a widely distributed network of payment centers,” she said.
Weather index-based insurance is an attractive approach to managing weather and climate risks because it uses a weather index, such as rainfall, to determine payouts and these can be made more quickly and with less argument than is typical for conventional crop insurance.
Villar said the WIBCI-type crop insurance would essentially improve and expand the current coverage and mandate of the Philippine Crop Insurance Corp., which “so far, it has too few participants and very miniscule outreach compared with the total number of farmers that is supposed to be served.”
From 2013 up to 2017, Congress has been appropriating an average of P1.55 billion per year to subsidize the PCIC insurance premiums on up to 600,000 hectares of rice farms in a number of provinces.
Still, against a total of almost P380 billion in palay production in 2014, the PCIC has been insuring only around P12.2 billion worth of crops annually or roughly 3% of potential insurable value.
“To effectively reach and serve more of the country’s five million small-hold farmers, provide them with greater resiliency, there is a need for the country to involve the private sector and adopt a more relevant strategy and also safeguard the food security of the broader rural population,” she said.
She said the bill aims to institute measures needed to effectively establish the weather index-based insurance service in the Philippines, ensure the access initially of the 2.4 million rice farmers to an innovation risk sharing arrangement aimed at enhancing their capacity to deal with extreme adverse weather events.
The program would require around P5.8 billion per year to be initially sourced from the Risk Management Fund (Unprogrammed Appropriations) to potentially cover the FIBCI premiums for 2.8 million hectares of rice lands.