Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

‘TWENTIETH CONGRESS.
First Regular Session

HOUSE BILL No._2907

Introduced by HON. ALFREDO D. MARANON III

EXPLANATORY NOTE

The Philippine Crop Insurance Corporation (PCIC) was established by virtue of
Presidential Decree (PD) 1467 on 11 June 1978 to protect farmers’ investments
against losses due to natural calamities and pest and diseases through crop
insurance. The Charter of the PCIC has since been revised twice through PD 1733
on 21 October 1980 and Republic Act 8175 on 29 December 1995

From a few thousand clients at the century's turn, PCIC now caters to several million
farmers every year. Year in and year out, PCIC has indemnified farmers across the
country with insurance payments worth billions of pesos for losses incurred due to
natural calamities that have become more destructive because of climate change as
well as pests and diseases affecting the production of the farmers.

The end of the PCIC's corporate life is fast approaching. in 2028, the PCIC’s corporate
term of 50 years, as set in Section 2.2 of PD 1467, will expire. In order for PCIC to
continue to perform its critical mandate of providing Filipino farmers a very effective
and important risk management tool for dealing with climate change and building
resilience; and in recognition of the importance of crop insurance to promote
agricultural development and food security, this bill seeks the extension of the
corporate life of the PCIC.

This bill also seeks to strengthen PCIC by institutionalizing the expansion of its
agricultural insurance lines. From initially covering rice and corn, it now has insurance
products that cover high-value crops, livestock and poultry, fisheries, non-crop
agricultural assets and credit and life-term insurance that assures payment for small
loans in case of death or incapacity of borrower, and loss of life by natural causes or
accident of farmers and fisherfolk and members of their families. The bill also directs
the PCIC Board to prescribe the criteria to evaluate the eligibility of the farmers and
fisherfolk to be insured, and to determine the appropriate premium rates of the
insurance products of the Corporation.

The passage of this measure is thus eamestly sought.

Al EDO D. MARANON III


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. _2907

Introduced by HON. ALFREDO D. MARANON II

AN ACT
STRENGTHENING THE PHILIPPINE CROP INSURANCE CORPORATION BY
EXTENDING ITS CORPORATE TERM, AMENDING PRESIDENTIAL DECREE NO.
1467, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

Section 1. Declaration of Policy. - It is hereby declared the policy of the State to
provide support to agriculture through adequate financial, production, marketing and
other support services. Towards this end, the State shall:

a) Ensure food security, intensity food production, promote agricultural credit, and
broaden the coverage of agricultural insurance amidst the recurrence of natural
disasters and calamities, such as floods, typhoons, heavy rains, and drought and pests.
and diseases that destroy crops, especially pa/ay and other grains and crops
necessary for food security;

b) Alleviate the financial burden of farmers and fisher folk due to losses arising from
destruction of their livelihood wrought by disasters and calamities; keep them away
from indebtedness; enhance their credit standing; and provide additional government
support to farmers and fisher folk to increase agricultural production;

c) Assist banks and financial institutions by enhancing their capabilities to extend loans
to farmers; and

d) Strengthen and expand the coverage of the Philippine Crop Insurance Corporation,
to provide insurance protection to farmers and fisher folk against losses arising from
natural calamities, fortuitous events, plant and fish diseases, and pest infestations.

Section 2. Section 1 of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

“Section 1. Creation of the Philippine Crop Insurance Corporation - There is
hereby created a body corporate to be known as the Philippine Crop Insurance
Corporation (PCIC and herein called the Corporation) which shall be attached
to the Department of Agriculture for budgetary purposes. The Corporation shall
insure farmers and fisherfolk against losses arising from natural calamities,
fortuitous events, plant and fish diseases, and pest infestations.


THE CORPORATION SHALL PROVIDE INSURANCE COVERAGE FOR
PALAY AND CORN CROPS, HIGH-VALUE CROPS, LIVESTOCK,
AQUACULTURE AND FISHERY PRODUCTS, AGROFORESTRY CROPS
AND FOREST PLANTATIONS; NON-CROP AGRICULTURAL ASSETS
SUCH AS MACHINERIES, EQUIPMENT, TRANSPORT FACILITIES, AND
OTHER RELATED INFRASTRUCTURE; AND LIFE AND ACCIDENT TERM
INSURANCE COVERAGE FOR FARMERS AND FISHERFOLK. IT SHALL
UTILIZE THE LATEST TECHNOLOGY FOR ITS OPERATIONS AND OFFER
PARAMETRIC/INDEX-BASED INSURANCE, AMONG OTHER INNOVATIVE
INSURANCE PRODUCTS. Such AGRICULTURAL insurance shall cover, AS.
FAR AS PRACTICABLE, the cost of production inputs, the value of the labor
of the farmer or fisher folk, and members of their households including the value
of the labor of hired workers, and a portion of the PROJECTED VALUE OF
THE CROPS. Such insurance protection, however, shall exclude losses arising
from avoidable risks emanating from or due to the negligence, malfeasance, or
fraud committed by the insured any member of the immediate farm household
or employee, or the failure of the insured to follow proven farm practices.

Section 3. Section 4 of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

“Section 4. Who shall be insured - TO SUPPORT THE AGRICULTURAL
SECTOR, THE CORPORATION SHALL PROVIDE AGRICULTURAL
INSURANCE PRODUCTS TO ALL ELIGIBLE OR QUALIFIED FARMERS
AND FISHERFOLK AS EVALUATED BY THE CORPORATION.

THE BOARD SHALL PRESCRIBE THE CRITERIA TO EVALUATE THE
ELIGIBILITY OF THE FARMERS, FISHERFOLK, AND FOOD PRODUCERS,
WHICH CRITERIA SHALL INCLUDE THE VULNERABILITY AND RISK
EXPOSURE OF FARMERS, FISHERFOLK, AND FOOD PRODUCERS TO
FORTUITOUS NATURAL AND CLIMATIC EVENTS OR OUTBREAK OF
PESTS AND DISEASES. THE BOARD SHALL ENSURE THAT THE
COVERED FARMERS, FISHERFOLK, AND FOOD PRODUCERS ARE
ADEQUATELY PROTECTED. THE CRITERIA SHALL BE ALIGNED WITH
THE OBJECTIVES OF THE GOVERNMENT TO ENSURE THAT THE
AGRICULTURAL INSURANCE PROGRAM IS SUSTAINABLE.”

Section 4. Section 5 of Presidential Decree No. 1467, as amended, is hereby further
amended, to read as follows:

"Section 5. Rate of Premium and its Sharing. - The rate of premium, as well as
the allocated sharing thereof by the farmers, the lending institutions, the
Government of the Republic of the Philippines (herein called the Government)
and other parties, shall be determined by the Board of Directors of the
Corporation: Provided, That the share of the Government in the premium cost
in the form of premium subsidy, shall be limited to subsistence farmers:
Provided, however, That each of these subsistence farmers is cultivating not
more than THREE (3) hectares by HIM/HERSELF INCLUDING members of
their households or hired labor, the premium rate and sharing to be determined
by the Board of Directors: Provided, further, That the premium share of the


subsistence farmer, IF ANY, shall be reasonably affordable by HIM/HER:
Provided, furthermore, That the Government shall share in the premium cost
only in insurance coverage against unforeseen and unavoidable risks such as,
but not limited to typhoons, droughts, outbreaks of pest and diseases: Provided,
finally, That premium subsidy and/or insurance benefits shall upon the
accumulation of surplus funds, be increased to such amount as may be
determined by the Board taking into consideration that the Corporation has
been established not only for profit but mainly to help the insured in their direct
hours of need.”

Section 5. Term of Existence - The term of legal existence of the Philippine Crop
Insurance Corporation, as provided in Section 2.2 of Presidential Decree No. 1467, as
amended, is hereby extended for a period of twenty-five (25) years from its expiration
‘on 11 June 2028, or until 11 June 2053.

Section 6. Separability Clause — If any provision of this Act is declared
unconstitutional, the remainder hereof not otherwise affected shall remain in full force
and effect.

Section 7. Repealing Clause. — All laws, decrees, orders, resolutions, instructions and
rules and regulations or parts thereof which are inconsistent with this Act are hereby
deemed repealed or modified accordingly.

Section 8. Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,