Unconscionable profits

In this country, the not so poor and the poor are getting more hard up and destitute because of several Filipino traits that make them easy preys even of their own countrymen. Their trusting and unsuspecting nature is actually an admirable asset except that in this world full of wolves in sheep’s clothing, it has become more of a liability. They likewise feel so uneasy to reject or to say no to others especially to close relatives and friends thus resulting in a number of embarrassments and sometimes unfulfilled commitments with direr consequences. "Appeasement" is the most apt term used by Fr. Miguel A. Bernad, S.J. who also writes in the Star, to describe this predisposition among our people. Maybe it is also part of human nature peculiar not only to Filipinos, but they also have the tendency to follow the line of least resistance that seeks the easy way and the quick fix methods requiring not much sweat and the least effort. It is due to this tendency that majority of the Filipinos comprised of the lower-middle and middle classes have become "seguristas" by trying to "buy" their own future.

Because of these traits, or "vulnerabilities" to be more accurate, we have seen how many well to do families have been broken and have gone to the poorhouse because their members have become addicted to big time casino gambling; or how the poor families have remained poor or have turned poorer as they wallow in the popular but illegal numbers grassroots game like jueteng and masiao. But the worst part is that several businesses or industries that  appear legitimate but look more like scams on closer scrutiny, like financing and marketing transactions based on pyramiding schemes, have proliferated and prospered riding on the crest of these Filipino weaknesses.

The latest "discovery" was the information elicited during the hearing of the Senate Committee on Trade and Commerce chaired by Senator Mar Roxas jointly with the Committee on Banks, that premiums already paid for pre-need plans that have lapsed due to failure to pay further premiums after a few years, are already considered income for the pre-need companies forming part of their cash flow and no part is reimbursed to the plan-holders. According to Senator Mar, the business model of pre-need companies show that these premiums amount to about 30-40 percent of the plans sold. For the years 1997-2003, CAP lapsed plans constitute 18-26 percent of the total plans sold. At one point in 1998, there were 15,984 lapsed plans amounting to P5.2 billions or 26 percent of the total plans sold! Senator Roxas also noted that the contribution plan based existing rules only provide for about 15 percent contribution to the trust fund of the premiums paid on the first two years while the balance goes to commissions, brochures and other marketing expenses.

Thus Senator Roxas correctly observed that there is a need "to protect the planholders who shelled out hard earned money on a promise of a brighter future for their children. They are not sophisticated investors who have lawyers and accountants to interpret the provisions of the plan. They do not usually read the fine prints on the plan. Most of the plan holders buy plans from relatives and friends and rely solely on their relationship with the agents in buying these plans.

Based on his findings, Senator Roxas has introduced a bill entitled, "Pre-Need Industry Act of 2005" for stricter regulation of pre-need companies. He proposes that the contribution plan should be bigger and a reasonable amount should be secured in the trust fund so as "to ensure first that the promise will be fulfilled when the need arises before allowing others to unconscionably profit from premiums paid by the plan holders. Thus the bill effectively increases the percentage of the premiums that go to the trust fund from 51 percent to 60 percent. The bill also provides for the creation of a plan holders’ protection fund against which plan holders may claim in case of insolvency of pre-need companies. It will also ensure arms length transaction between pre-need companies and their trustee banks as well as prohibit arrangements between interlocking directors of sister companies (DOSRI accounts).

This is one bill that somehow inspires confidence among the people that we still have some political leaders who have the welfare of the people and the common good at heart.

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