Sales of pre-need plans decline by 10% in 2002

Sales of pre-need plans dropped by 10.08 percent last year to 607,155 from 675,187 in 2001, a report prepared by the Securities and Exchange Commission’s Non-Traditional Securities and Instruments Department showed.

An SEC official attributed the decline in the number of plans sold to the current difficult business environment and the controversies that plagued the industry, among which are the trust fund deficiencies of several pre-need plan firms.

Another reason cited was the increased prices of plans. Several pre-need companies jacked up their rates by 15 to 20 percent as a result of low yield from their investments.

Based on the figures collated by the SEC-NTD, pension plans accounted for the bulk of the sales with 339,105 units sold or 5.36 percent higher than the previous year’s 358,314 units.

Life plan posted the biggest decline in the number of plans sold last year from 88,989 to 73,074. The value of the sales of these plans likewise slipped to P2.09 billion from P2.68 billion.

The value of pre-need plans sold went down by 2.64 percent to P37.65 billion in 2002 from P38.67 billion the previous year. Bulk or P22.26 billion of the total sales came from pension funds, accounting for 339,105 units compared with only 358,314 the previous year.

The number of education plans sold fell by 14.44 percent to 194,976 from 227,884 a year earlier. The value of their sales slid to P13.31 billion from P15.01 billion.

College Assurance Plans (CAP) continues to dominate the sale of education plans with a total of 79,215 units sold to the public valued at P2.79 billion. Loyola Plans Inc. came in second with 17,842 units sold valued at P1.51 billion followed by Berkley International Plans with 17,725 units sold valued at P1.5 billion.

In terms of sales, however, Philam Plans ranked second with P2.38 billion. The company sold 17,448 educational plans.

Other firms whose sales hit the P1-billion mark are Pacific Plans (P1.31 billion) and Prudentialife Plans (P1.57 billion).

Among issuers of life plans, Prudentialife was the top seller with P611.55 million in sales followed by Pacific Plans (P397.22 million), Philam Plans (P227.71 million), and Loyola Plans (P17.93 million).

As for pension plans, Philam Plans led the pack with sales of P5.53 billion. Prudentialife Plans was the second biggest seller with P3.68 billion in sales followed by CAP’s Comprehensive Annuity Plans & Pension with sales of P2.53 billion.

Juan Miguel Vazquez, president of the Philippine Federation of Pre-need Plan Companies Inc., projects that over the next fours, the pre-need industry will be recording much bigger growth than the insurance industry.

Vazquez said the pre-need industry grows at a rate of 40 percent annually despite being hounded by issues of trust fund deficiencies and solvency of pre-need firms.

The industry caters to clients who resort to pre-need plans as saving mechanisms to answer future needs of either themselves or their beneficiaries. The plans provide for the educational costs of their children; their pension upon retirement; and memorial service upon their demise.