Conclusion
THE Insurance Commission has shared the enthusiasm of the Philippine Federation of Pre-Need Plan Companies Inc. (Pre-Need Federation). The reason for its upbeat attitude is the entry of new players to the industry.
The IC told the BusinessMirror that it had granted a license to one company this year: Cosmopolitan Climbs Life Plan Inc. (CCLPI).
Based on IC data, the regulator has, as of end-September this year, granted licenses to sell pre-need insurance products to 16 companies.
According to Pre-Need Federation President Elmer M. Lorica, there are three companies eyeing to enter the industry. Aside from CCLP, the other two are Golden Haven Memorial Park Inc. and Diamond Life Plan Inc.
“[The application of] Golden Haven and Diamond Life Plan are being processed and for submission of their requirements for licensing,” Lorica told the BusinessMirror.
The IC said an applicant failed to comply with capitalization requirements, which resulted to the denial of its license. The IC said it has yet to receive the application of another firm.
“A company manifested that it will apply for a new license to act as a pre-need company, but the company has yet to formally submit its application,” the IC said.
Required capital
UNDER Republic Act 9829, or the Pre-need Code, pre-need insurance companies that started operations after the enactment of the code shall have a minimum paid-up capital of P100 million.
Existing pre-need insurance companies, on the other hand, are required to comply with the following minimum unimpaired paid-up capital: P100 million for those selling at least three types of pre-need insurance products, P75 million for those selling at least two types of plans and P50 million for those only selling one type of pre-need insurance plan.
“Existing pre-need companies with traditional education plans shall have a minimum unimpaired paid-up capital of P100 million,” the Pre-need Code said.
Earlier, Lorica urged pre-need insurance companies to continuously innovate and respond to the needs of the public.
“Despite the setbacks suffered by the industry in the past, demand for pre-need plans remains significant because of the Filipino’s desire to provide for the present and future needs of their families,” Lorica added.
New products
ASIDE from the expansion in the number of pre-need insurance companies in the country, the Pre-Need Federation is also eyeing to implement a number of proposals on how to further develop the industry. Among the proposals being looked into is the introduction of new pre-need insurance products.
The Pre-Need Federation is the umbrella organization of all pre-need insurance companies in the country. Under Presidential Decree 52 of 2001, it declared the first week of the month of February of every year as the “Pre-Need Consciousness Week” in order to increase awareness and appreciation of the Filipino people on the pre-need insurance industry and its vital role in securing the future.
In February this year, the IC encouraged pre-need insurance companies in the country to capitalize on the technological advancements of the digital age to further improve their products and services.
Insurance Commissioner Dennis B. Funa had solicited the help of the Philippine pre-need insurance industry to help the IC find new innovations and capitalize on technology to offer better pre-need insurance products and services to Filipinos.
“As such, the use of technology advancements in order to offer and render services applies not only in insurance but also in the pre-need industry,” Funa said.
IC memo
UNDER the Pre-Need Code, insurance companies must register their respective contracts and plans within 45 days after the grant of its license.
“Within a period of 45 days after the grant of a license to do business as a pre-need company, and for every pre-need plan that the pre-need company intends to offer for sale to the public, the pre-need company shall file with the Commission a registration statement for the sale of pre-need plans pursuant to this Code,” the Pre-Need Code said.
Last year the IC issued circular 2015-57, which defines what constitutes a pre-need insurance product so as to stop the proliferation and unauthorized sale of memorial plans in the country.
Under former Insurance Commissioner Emmanuel F. Dooc, Circular Letter 2015-57 was issued, prescribing all entities selling pre-need insurance plans to seek prior accreditation from the IC, and that all pre-need insurance products need prior approval before these may be sold or advertised.
The IC came up with an advisory against three companies selling pre-need memorial plans without authorization, namely: Freedomlife Insurance Co. Inc., Prime Care Kaagapay and DMS 1955.
Regulatory tack
PRE-need insurance plans are contracts that provide for the performance of future services to their policyholders, the payment of monetary considerations or delivery of other benefits at the time of actual need or agreed maturity date, in exchange for cash or installment amounts with or without interest or insurance coverage.
Pre-need insurance plans include life, pension, education, interment and other contracts or deeds as may be determined by the IC in the future.
The supervision of the pre-need insurance industry was transferred in 2008 to the IC from the Securities and Exchange Commission. The IC under the Pre-Need Code was given the power to regulate the industry.
“All pre-need companies, as defined under this Act, shall be under the primary and exclusive supervision and regulation of the IC. The Commission is hereby authorized to provide for its reorganization, to streamline its structure and operations, upgrade its human-resource component to enable it to effectively and efficiently perform its functions and exercise its powers under this Code,” the Code said.
Image credits: Nonie Reyes