Pre-need firms open to familiarization talks with IC

The pre-need industry is open to holding familiarization talks with the Insurance Commission (IC) in preparation for the possible transfer of the regulatory functions from the Securities and Exchange Commission (SEC) to the IC.

At present, the SEC is the regulatory body overseeing the development of the pre-need industry. However, there are bills in Congress seeking to transfer such function to the IC, an agency of the Department of Finance (DOF).

"We are open to giving them an orientation if they want to know how the industry operates. We both can find out ways to promote the industry under their guidance," said Miguel M. Vasquez, president of the Philippine Federation of Pre-need Plan Companies Inc. (PFPPCI). Vasquez is also the president and chief executive officer of Permanent Plans Inc.

He said this will allow for a smooth transition from one regulatory agency to another. Four bills in the House propose to transfer the regulatory functions as well as the formulation of a pre-need industry code to the IC.

The proposals are being worked over and consolidated by a congressional technical staff, which includes representatives of the PFPPCI. Sen. Franklin Drilon is reportedly sponsoring a bill in the Senate based on the consolidated bill of the House.

Meanwhile, for as long as there is no new law, Vasquez said they will maintain a good working relationship with the SEC.

"We are happy with the SEC, which has improved substantially its regulations putting up the non-traditional department. If our legislators see it better for us to be under the IC, then we will follow the law," the PFPPCI president said.

Meanwhile, he said that the industry’s trust funds had reached P44 billion after the first six months of the year from P38 billion at the end of 2001.

Pre-need companies are required by law to set aside at least 51 percent of their first-year premiums in a trust fund. The minimum requirement used to be 40 percent but it was increased in the last quarter of last year in the face of growing complaints of payment delinquency in claims.

The required paid-up capital was also increased to P100 million, which was implemented this year in several tranches. Companies with a paid-up capital of P75 million can only sell two plans such as memorial and pension plans. Those with a capital of P50 million can sell only one plan while companies with over P100 million paid-up capital can sell all three types of plans.

The pre-need industry registered a sales volume of P37.1 billion as it grew by an average 30 percent over the past six years. In 1985, sales reached P5 billion rising to P17.5 billion after only 10 years. It doubled to P36 billion in 2000 to P37.1 billion last year. The industry claims to have a client base nearly nine million subscribers.