During the hearing of the House oversight committee, headed by Quezon Rep. Danilo Suarez, Yasay told panel members and planholders of the College Assurance Plan and Pacific Plans the main culprit is the Accelerating Growth for Investment Liberalization and Equity (AGILE).
"It was the changing of the rules of the SEC that played a major part in what is happening now. Not only is it detrimental to the pre-need companies and planholders, it will also kill the entire industry," he said, referring to the "actuarial reserve limitation (ARL)."
ARL, according to Iloilo City Rep. Rolex Suplico, is the "amount of reserve money that an entity must have at any time." Yasay said ARL, which he declined during his watch, from 1995 to 2001, was imposed in 2002, when former SEC Chairman Lilia Bautista took over the helm, of SEC.
"The ARL wreaked havoc on the industry itself. I don’t know why they adopted it (AGILE proposal) hook, line and sinker," he said, pointing to Sen. Mar Roxas as the culprit, since it was he who endorsed it to the SEC, even if it was not under the Department of Trade and Industry.
Yasay, who was invited as a resource person, told the Suarez panel that SEC is under the Department of Finance (DOF) and not under the DTI. SEC is the government body tasked to regulate pre-need companies, like CAP and Pacific Plans.
To prove his point, the former SEC chief revealed that in 2002, pre-need firms were compelled to put up a P2.5 billion ARL, which grew to P7.5 billion the following year (2003) and ballooned to P15 billion in 2004, which made it very difficult for companies to cope.
"Up to the year 2000, big pre-need companies didn’t have specific problems because we regulated them on the basis of assistance," he said, noting that due to this, the industry even "surpassed life insurance companies by leaps and bounds."
Meantime, most members of the panel wanted the Yuchengcos, who own Pacific Plans, to be summoned as they never attended the hearings, not even their lawyers. "If they want us to respect their company, they should respect us also," said Rep. Milagros Magsaysay.
"I think it’s about time we put some teeth to this and compel them to show up," the Zambales lawmaker said. Other congressmen urged Suarez to persuade Speaker Jose de Venecia to sign the subpoena.