ANGARA SEEKS TO REGAIN PUBLIC CONFIDENCE IN PRE-NEED INDUSTRY

To regulate pre-need companies while protecting the interests of planholders, Senator Edgardo J. Angara today pushed for the establishment of a comprehensive Pre-Need Code, which adopts a Trust Fund model for pre-need companies.

"In a Trust Fund model, a portion of the payment collected by the pre-need company will be deposited in a trust fund. This would help guarantee the delivery of benefits to the planholder in the future, and minimize the risk of insolvency as the trust fund will remain untouched until the plan matures," explained Angara.

Angara, chairman of the Senate Committee on Banks and Financial Institutions, said that there is an urgent need for a law that will regulate the pre-need firms and in effect, lessen the woes of planholders.

"The pre-need sector is a vital part of the national economy, and it has to realize its full growth potentials. The regulatory framework, in turn, will provide the environment that will allow the pre-need firms to be stronger, bigger, and more stable so that we would avoid the same problems in the future," said Angara.

Angara noted that there are close to four million planholders today. He added that a total of 92 preneed firms have been registered for the last 25 years. In 2005, however, the number of preneed companies licensed to operate suddenly went down to 32 after the unexpected collapse of the first pre-need firm in the country - Pacific Plans Incorporated (PPI) - following the same fate of industry leader College Assurance Plan (CAP). Numerous protests were launched due to unpaid claims of thousands of planholders

Angara said that the major factor that caused the failure of some companies is the issuance of traditional educational plans, which "amounted to an open commitment, so when the deregulation of tuition fees occurred in 1992, there was a tremendous increase in the tuition obligations of pre-need companies that they were not able to pay."

Under a traditional educational plan, the pre-need company agrees to pay the tuition charged by the school at the time the claim is made.