PCIC requested to present the financial situation, contingent liabilities
MANILA – Finance Secretary Carlos Dominguez III asked the leadership of the Philippine Crop Insurance Corp. (PCIC) to present on October 7 to its newly reorganized board of directors the financial situation of the state corporation and the calculation of its contingent liabilities.
In a statement released on Sunday, Dominguez said the presentation should include an overview of how the PCIC should be managed and initial ideas on possible reinsurance coverage the PCIC can provide; extending insurance coverage to include more crops; and how the PCIC can provide parametric insurance against its current policies.
At the first meeting held last month by the reconstituted PCIC board of directors, Dominguez said one of the body’s immediate tasks was to reorganize the company, stop its financial hemorrhage and determine how it can provide better insurance coverage for Filipino farmers.
Dominguez, who now chairs the PCIC board, said the PCIC has relied heavily on substantial grants from the national government over the past 20 years.
During this period, the government has provided more than PHP 23.3 billion in grants through the national budget and injected an additional PHP 5.3 billion into the PCIC from the Agri-Agra Fund since 2015, a he added.
For 2022, the proposed subsidy to the PCIC amounts to PHP 4.5 billion.
He said this “trend is not sustainable” and that the board should find ways to ensure that PCIC’s key stakeholders – Filipino farmers – get the most out of their money through the campaign. subsidy of insurance premiums that PCIC receives from the national government.
Thus, for the next meeting of the board of directors, Dominguez asked the management of PCIC “to give us a presentation on what the company’s financial situation really is” and its “calculated contingent liabilities”.
GSIS CEO Rolando Macasaet suggested that PCIC consider adopting the Philippine Financial Reporting Standards 4 covering insurance contracts so that the company can properly prepare its financial statements.
The board has appointed lawyer Joyce Briones of the DOF legal affairs office as the new PCIC general secretary.
The new board is now made up of Dominguez as chairman, and Agriculture secretary William Dar as vice chairman.
PCIC President Jovy Bernabe, Land Bank of the Philippines (LandBank) CEO Cecilia Borromeo and Macasaet as members.
One representative each from the private insurance industry and the subsistence farming sector, preferably representing land reform beneficiaries / cooperatives /
Given the new composition of the PCIC board of directors, the board also reconstituted its governance and audit and risk management committees.
For the Governance Committee, Dominguez is the chair, while Macasaet and Dar are vice-chair and member, respectively.
This committee will oversee the periodic evaluation of the performance of the Board, its committees and management; and recommend to the Board, among other things, the continuing education of directors and appointments to Board committees.
For the Audit and Risk Management Committee, Borromeo was elected Chairman, while Dar was appointed Vice Chairman and Macasaet as a member.
In addition to developing a transparent financial management system for the PCIC and performing risk management oversight functions, this committee is also responsible for overseeing, monitoring and evaluating the company’s internal control system and coordinate with the Audit Commission (COA); and review and approve the scope and frequency of the audit, the annual audit plan, the financial statements and auditors’ reports, and ensure that management takes appropriate corrective action.
Dominguez also stressed the need for the PCIC to adopt a new business model and offer “the most competent leadership” to ensure that its operations remain sustainable, if not completely free of subsidies.
To address the pressing concerns of the PCIC, “the PCIC must be led by professionals in the insurance industry and guided by the best actuarial advice,” said Dominguez.
The PCIC should engage the services of an actuary accredited by the Insurance Commission (IC) to perform the valuation of its actuarial reserve liability, he said.
Dominguez said the PCIC should provide increased insurance coverage to farmers with lower premiums, while determining how much the government is losing due to the lack of adequate insurance coverage in the agricultural sector.
Executive Decree (EO) No 148 taken by President Duterte on September 14 reorganized the board of directors of the PCIC and transferred its attachment from the Ministry of Agriculture (DA) to the Ministry of Finance (DOF) “for s ” ensure that its operations are streamlined and centrally controlled so that government assets and resources are used efficiently, and that government exposure to all forms of liabilities, including grants, is justified and incurred by prudent measures. (RP)