Sources within the Securities and Exchange Commission (SEC) said that at least five more players would most likely be de-listed or deactivated while there would be some realignment in the top 20 players.
"Capital and reserve deficiencies coupled with a significant drop in sales in the face of a weak economy would likely be the major reasons for the demise," they said.
Jose Alberto T. Alba, Prudential Plans president said in an earlier interview that they were expecting further contraction with the less capitalized and insufficient reserves taking a bye. "That is necessary if we are to ensure the protection of the investing public," Alba added.
Alba admitted that the industry took a beating due to the bad publicity of some of its members being reserve deficient which would later result in their inability to service claims.
In contrast, more foreign players especially those allied with insurance companies and other financial institutions will have a solid base and they are expected to figure more prominently. Most will move up to the top 10 while those already within the magic 10 would solidify its hold.
Latecomers Manulife Education and Pension Plans, and Sun Life Plans have a big advantage. They are perceived to be more professional, have strong financial backing and a high level of actuarial experience and knowledge.
"They had the advantage of studying the industry first before taking the plunge," said the SEC source.
After less than three years in the decades old industry, Manulife Plans has been ranked among the top 10 players while juvenile SunLife Plans is poised to grab the 10th place overall in a number of years.
Industry players said that the new regulations and requirements have made the industry in general more professional and capable of meeting future claims. The SEC, which has been regulating the industry, has instituted stiffer regulations designed to assist the industry while ensuring that it would be financially sound.
The difficulties experienced by the industry in the past two years reflected the weakness in the system, which were only frontally addressed last year. Among these were the low reserve requirements, low capital base, regulations on investments and loans particularly those affecting the directors and other managerial positions, and correct accounting and actuarial practices.
"Companies must be more transparent and accountable to the planholders," Jose L. Cuisia Jr., chairman of Philam Plans, and president and chief executive officer of the Philippine American Life and General Insurance Co. (Philamlife).
A minor contraction of the industry will not result in any shakeup since the top 10 companies already accounted for almost 85 percent of the total plans in force.
Of the total 223,411 plans sold, the top 10 players accounted for 164,345 plans. Total value of the plans sold amounted to P13.1 billion of which the top 10 players was responsible for almost P11 billion.
Based on data lifted from the Securities and Exchange Commission (SEC), the top 10 players are Philam Plans Inc., Prudentialife Plans Inc., College Assurance Plans Inc. (CAP), Pacific Plans Inc., Loyola Plans Inc., Berkley International Corp., Eternal Education Plans Inc., Manulife Education and Pension Plans, Platinum Plans, and TPG Corp.
Four of the top players have foreign affiliates while the rest have strong financial backing having been in the forefront of the industry‚s birth and development. These include CAP Plans, Pacific Plans and Loyola Plans.
Outside of the top 10 players in terms of total plans sold, other profitable pre-need companies, which figured in the top 10 in different product categories, are PET Plans, Sunlife Plans, St. Peter Life Plans, Himlayan Pilipino, and Provident Plans.
Sometime in the mid to late Œ90s, players in the pre-need industry almost broke the century mark. However, poor economic and investment conditions plus new protective regulations started a process of elimination resulting in a reduction to just 42 at the end of 2002.
Several bills are pending in Congress which seeks to transfer the industry from the regulatory mandate of the Securities and Exchange Commission (SEC) to the Insurance Commission. It likewise introduces new regulations ensuring sufficient reserves or trust funds to ensure the industry’s ability to service its client base as well as ensure the viability of the industry. – Ted P. Torres