ANGARA EXPECTS PASSAGE OF PRE-NEED BILL

A strong pre-need code that will ensure the protection of planholders' interests and the viability of the preneed industry is forthcoming.

Senator Edgardo J. Angara today announced that the Senate would soon ratify the bicameral conference report seeking to establish a sustainable regulatory framework for the pre-need industry. This was after the bicameral committee reconciled the House and Senate versions of the bill.

"The pre need sector is a vital part of the national economy and an anchor of hope for millions of Filipinos. But it needs to become stronger and more stable, and realize its full growth potential. We need a regulatory framework that will provide an environment that will allow pre need firms to thrive so that they can protect the investing public," said Angara who chairs the Senate Committee on Finance.

Angara said 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 and unforeseen increase in the tuition obligations of pre-need companies that they were not able to pay."

He added that "another factor that confounded to the problem is bad management and unsound investment decisions made by pre need companies during a non regulated regime," he added.

All pre need companies are under the primary and exclusive supervision and regulation of the Insurance Commission which has the power to enlist the aid and support of and/or deputize any and all enforcement agencies of the government in the implementation of its powers and in the exercise of its functions.

For transparency, the bill requires full disclosure, among others, of the company's investment of its trust fund. Pre-need companies must have a minimum paid-up capital of P100 million to provide a solid capital base and lessen the risk of instability in the future. The Insurance Commission may prescribe a higher minimum unimpaired paid-up capital for pre-need companies. It imposes strong criminal and administrative penalties on directors and officers for self-dealing and conflict of interest transactions. Also, salesmen must undergo a licensing exam before he can sell a pre-need plan.

No pre-need company shall refuse, without just cause, to pay or settle claims arising under coverages provided by its plans nor shall any such company engage in unfair claim settlement practices.

In case the insolvency or bankruptcy is a mere cover-up for fraud or illegality, the plan holder may institute the legal action directly against the officers and/or controlling owners of the said pre-need company.

The Pre-need Code requires compliance on unimpaired capital, trust fund, and sufficiency of amount for losses, liabilities and taxes on the declaration of dividend of pre-need company.

To ensure the delivery of the guaranteed benefits and services provided under a pre-need plan contract, a trust fund per pre-need plan category shall be established. A portion of the installment payment collected shall be deposited by the pre-need company in the trust fund, the amount of which will be as determined by the actuary based on the viability study of the pre-need plan approved by the Commission.

For plan holders who become hard up to pay their installments, a pre-need company shall provide a grace period of at least 60 days to pay unpaid dues. If he/she is still unable to pay within this period, and the plan is rendered ineffectual, the plan holder is given two years to reinstate the plan.

Further, to establish transparency every pre-need company shall publish in two (2) newspapers of general circulation a full synopsis of its annual financial statements, including the trust fund annual statement showing fully the conditions of its business, and setting forth its resources and liabilities in a standardized format to be designed by the Commission.

By creating a solid framework which places the operation of pre-need companies on sound, stable and sustainable ground, Angara said that we can afford the best protection we can extend to plan holders.

"What we are trying to change is the unregulated anything-goes regime that has created the problems in the first place. Pre-need companies exist to provide insurance for the education, health and other vital needs of its plan holders, thereby filling the void that government cannot fill. Hence, there is great economic value in fostering the pre-need industry and ensuring that they flourish for years to come," added Angara.