Agriculture Insurance in the Philippines

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Agriculture Insurance in thePhilippines

• Todays Dilemmas

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• In practice, agricultural or crop insurance is
  really an adjunct to a whole set of risk
  management measures of which adequate farm
  management practices constitute the most
  important. Insurance by itself is no substitute
  for good production practice. The test of a good
  insurance programme is the cost versus the
  expected benefits and the sustainability thereof.
• Diverse Objectives for Value Chain Analysis
• Identify existing gaps and inefficiencies by
  analyzing cost structure of the system and seek
  ways to reduce these costs and increase
  productivity
• To understand and improve the positions of
  certain stakeholders
• Unlocking additional value in the supply chain

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AGRICULTURE
Ex. RICE PLANTING SEASON
Seedings
Planting
Nurturing or Growing
Harvesting
Pests
Excessive Pesticide
Fire


Irrigation
CAT Perils
(EQ, TYPHOON, FLOOD)
Optional
on hillside plots
Landslide
Volcanic Eruption
Near active volcanoes (to include volcanic ash
damage, lahar, etc..
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TRANSPORT WAREHOUSING RISKS
Storage
Loading
Transit
Storage
Unloading
Pests
Fire
CAT Perils
(EQ, TYPHOON, FLOOD)
Pilferage
Hijacking
Collapse of Bridge
Overturning of vehicle
Collision/Accident
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MARKET RISKS
Storage Risks
Display Risks
Loss of Value


Pests
(wetting/heat)
Fire
CAT Perils
(spillage/robbery)
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• Single Peril Insurance Yes
• Multiple Peril No
• Private sector can deliver sustainable and
  actuarially fair
• single peril insurance products but not multiple
  peril
• products.
• Examples hail, rain, fire, wind
• But single peril is not interesting to most
  resource limited
• farmers. Poor farmers want yield and/or revenue
• protection at an affordable price.

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• Traditional Multiple Peril Insurance
• Programs Unsustainable
• Moral Hazard
• Adverse Selection
• High Administration Costs
• Pricing Dilemma Sound pricing would make
  it unaffordable. Subsidized pricing represents
  fiscal cost that worsens as national income
  levels fall and size of farm population rises.