Pre-need sector needs to be regulated, supervised — BSP

The Bangko Sentral ng Pilipinas (BSP) has underscored the need for regulating and supervising the pre-need industry.

BSP officer-in-charge Diwa Guinigundo said while they support the need to regulate and supervise the pre-need industry, the monetary authority cannot play this role.

"The BSP cannot assume the role of the regulator and supervisor of the pre-need industry because under its charter its supervisory and regulatory authority is limited to banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied activities," Guinigundo said.

With this restriction, the BSP official said they can only support any move to push for the regulation and supervision of the industry.

"Thus, the BSP supports the proposed ‘Pre-need Code of 2005’ which seeks to regulate the establishment of pre-need companies and to place their operations in sound, efficient and stable basis to derive the optimum advantage from their savings mobilization while at the same time preventing and mitigating practices prejudicial to public interest," he said.

Guinigundo pointed out that monetary authorities are in favor of putting these companies under the close supervision of the Insurance Commission (IC).

"In particular, the BSP supports the proposal to place pre-need companies under the supervision and regulation of the IC. Since the operations of pre-need companies are more similar to the operations of insurance companies, the IC can be an effective regulator and supervisor of pre-need companies."

He said the BSP also agrees that the reorganization of the commission, streamlining of the structure and operations and upgrading of its human resource component will enable it to perform its regulatory and supervisory functions over pre-need companies as envisioned in the proposed ‘Pre-Need Code.’

The central bank, he said also supports the other provisions of the proposed code that seeks to rationalize the operations and regulatory environment of pre-need companies, particularly the provisions on: Fit and proper rule; independent directors; trust funds; actuary; and actuarial reserve liabilities (ARC).