Trust

What has been feared by so many has happened. The Insurance Commission (IC) has ordered Prudentialife Plans Inc.(PPI) to stop paying its planholders as of last Monday. Many of its planholders have been thankful that PPI has continued to honor its commitments based on the plans that they have already sold. Even when the SEC ordered PPI to stop selling new plans in 2009, PPI soldiered on to the relief of many. They have not gone the way of other pre-need companies like CAP and Pacific Educational Plans, to the utter dismay of their respective planholders.

 The rationale behind the IC order is that PPI is hemorrhaging, and it is already in danger of running out of funds. PPI still has hundreds of thousands of planholders who have not collected a cent from their plans. These are what the IC wants to protect. That PPI will submit a corporate rehabilitation plan for them to continue operating in the coming years.

 I can understand the plight of PPI. In 2009, they were barred by the Securities and Exchange Commission (SEC) from selling new plans. The whole pre-need industry was in question, thanks to the criminal Celso de los Angeles and his Legacy shenanigans. Thousands lost their savings because of the greed of one man. So how could PPI sustain its operations and keep paying its planholders if they could not sell new plans? If money doesn’t come in, what can they put out? Like a bucket with a large hole under a dripping faucet. What also put the whole pre-need industry in tatters was the large tuition fee increases that schools implemented. Actuaries based their computations on a ten percent annual increase. It just didn’t happen.

 But while I understand the plight of pre-need companied, PPI in particular, I also fully understand the concerns, the anxieties and the angst of the planholders. The whole insurance industry is initiated by trust. A company offers trust to its clients, that they will provide for whatever they agreed upon when the time comes. Whether it is tuition for their children, insurance for a departed loved one, hospital expenses or whatever else, the company promises that. It is what they dangle in front of their clients.

I commend Prudentialife for continuing to serve its clients despite the hard times. But at the same time, I ask that they continue to do so. For the sake of their planholders who put their trust in them. Something that just becomes rarer and rarer everyday.