Department of Finance to raise capital of pre-need firms

MANILA, Philippines - The Department of Finance (DOF) is considering jacking up the capitalization of pre-need companies five times more than the current level to protect the welfare of Filipino consumers.

Finance Secretary Cesar Purisima said in a statement that the Insurance Commission (IC) is currently studying the planned increase in capitalization for pre-need companies.

“We are looking at the possibility of increasing capitalization of pre-need companies five times from where they are now, depending on the number of plans they are issuing,” Purisima stressed.

The finance chief disclosed that the implementation of the higher capital requirement would be done “in a staggered basis” to “give firms time and space to adjust to the new requirements.”

Section 9 of Republic Act No. 8929 or the Pre-Need Code of the Philippines provides that the Insurance Commission that is under the supervision of the DOF “may prescribe a higher minimum unimpaired paid-up capital for pre-need companies.”

The Pre-Need Code of 2009 provides that a pre-need company incorporated after the effectivity of the law should have a minimum paid up capital of P100 million.

The code also prescribed raising “minimum unimpaired paid-up capital” for existing pre-need companies before the law was enacted depending on the number of plans they sell: P50 million for companies selling single type of plan; P75 million for those with two types and P100 million for firms offering three plan types.