A case study of the Philippine Crop Insurance Corporation

Date

2005

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Custodio, Hipolito C.

Abstract

Crop insurance is a risk management tool that provides insurance coverage and financial support to farmers in the event of loss due to the uncertainties and risks associated in agriculture. The main objective of the case study was to present and analyze the management and operation of the Philippine Crop Insurance Corporation. Specifically it aimed to: present the historical background and profile of the Philippine Crop Insurance Corporation; analyze relevant elements in the business environment of the corporation in terms of its major functions; identify and analyze the major issues and problems faced by the corporation; generate and evaluate alternative solutions to the identified problem and; identify the best solution and design an implementation plan for the chosen solution. The Philippine Crop Insurance Corporation was established in 1978 under the Presidential Decree No. 1467. PCIC has 13 regional offices that are strategically located in different regions to provide services in the countryside. It adopted two kinds of crop insurance plans, namely the Multi-risk coverage (losses caused by any peril) and natural-disaster coverage (losses caused only by natural perils such as typhoon, flood, drought, volcanic eruption and earthquakes) The corporation has been operating for 20 years and has diversified into many product lines. From rice as the only crop insured, crops such as corn, abaca, banana, mango, pineapple, potato, industrial trees and others are can now be insured. Also, Livestock can be insured the corporation joined the Pool of Livestock Insurers. Non-cro assets like machinery, rice mills and other farm equipment can also be ensured. There are special insurance programs such as aquaculture, GMA-Hybrid rice and farmer insurance that are being offered by the corporation. Premium rates vary in different municipal levels and by cropping season. Difference in rates is based on the area's risk classification, whether low, medium, or high-risk area. Traditional lines (rice and corn) are subjected to government premium subsidy (GPS). However, the corporation is experiencing delays in claiming GPS. Eighty-five percent of PCIC's customers come from the Land Bank of the Philippines. Also Local Government Units, Farmer's Organization and other non-government organization avail a crop insurance. The major activity divided into two: the underwriting and Marketing of Crop Insurance Policies; and claims adjustment and Settlement. the former is basically; the approval or rejection of applicants based on the qualifications set by the corporation while the latter is the process of indemnification. The corporation is composed of seven-member BOD. The President of the Philippines appoints the Chairman of the Board from the BOD. Due to the cost-cutting measures of the corporation, personnel decrease from 500 to 212 employees. Since the PCIC is government-owned, it follows CSC rules for employment. PCIC is mandated to provide services to many small-marginalized farmers even in the far-flung areas that resulted to high administrative cost incurred by the cooperation. Although profit is not the priority, PCIC must not incur net losses to be able to continue its operations. With the use of SWOT analysis, through the four function areas of management-marketing, production, personnel and finance- together with the industry information, the corporation has the following alternatives: (1) downsize, (2) change the "Individual Approach" to a Rainfall Index-based Insurance scheme (3) adopt the US RMA model - the cooperatives will serve as the direct insurer and PCIC as reinsurer.

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2005 M17 B35

Document Type

Thesis

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