By Azer Parrocha
MANILA, (PNA) — Sen. Juan Edgardo Angara is set to call for a Senate inquiry into the state of the pre-need industry and the implementation of the Pre-Need Code amid the clamor of the victims of the recent collapse of a major pre-need company in the country.
As one of the authors of the Pre-Need Code of the Philippines, Angara said it was necessary to look into the pre-need industry to protect not only the industry itself but the interests of planholders as well.
“First and foremost, we need to protect the public interest especially those who have invested in educational plans,” Angara said.
“If these pre-need companies continue to fail, it’s like we’re robbing the Filipino youth the opportunity to go to school,” he added.
According to reports, some 300,000 certified holders of education, pension and memorial plans have suffered or would suffer huge losses from the collapse of Prudentialife Plans Inc.
The Insurance Commission placed PPI’s trust fund deficiency at P14 billion, thus ordering the company’s liquidation in July.
Under PPI’s terms of liquidation, policyholders will be reimbursed the amount they spent for premiums but with huge cuts. The educational plan holders will only get an average of 4.6 percent of their contributions, while pension plan holders will get an average of 33 percent and life plan holders will get an average of 60 percent.
A group of PPI plan holders is now calling for the deferment of the liquidation process, saying policyholders should get more out of their money.
“The educational plans fiasco not too long ago should never happen again. The pre-need industry has once lost its credibility among the public after it jeopardized the future of millions of Filipinos,” Angara said.
“I urge our colleagues in the Senate and the responsible government entities to look into this matter,” he added. “Filipinos should no longer fear for the safety of their hard-earned money which would supposedly guarantee a better future for their family.”
To date, based on IC’s latest data, there are only 20 remaining licensed pre-need companies from more than 200 pre-need firms operating in the country in the late 1990s.
Another factor that caused the failure of these companies was the issuance of traditional or open-ended educational plans.
Also, the increases in tuition after the enactment of the law deregulating the education sector in 1992 exceeded the projections of pre-need firms.
The Pre-Need Code (RA 9829), which was signed in 2009, transferred the supervision and regulation of all pre-need companies and agents from the Securities and Exchange Commission to the IC as the law recognized that pre-need products are more like insurance rather than investment products.
Under the law, a pre-need firm is required to have a minimum paid-up capital of P100 million pesos and to establish a trust fund per pre-need plan in order to provide a solid capital base to ensure that pre-need firms have the means to service their liabilities and lessen the risk of instability.