Pre-need code approval sought

The approval of the pending Senate Bill 2077, also known as An Act Establishing the Pre-Need Code of 2008, and authored by Senators Manuel A. Roxas, Edgardo J. Angara and Loren B. Legarda, should be fasttracked by Congress since it will afford protection to the thousands of plan holders in case another pre-need firm collapses. The Bill was passed by both Houses as of September 30, 2009.
Davao City Councilor Danilo Dayanghirang called for the passage of the bill during last Tuesday’s council session after the Parents Enabling Parents coalition (PEP) brought to his attention the schemes being resorted to by pre-need companies that have been suspended and closed down by the Securities and Exchange Commission,
“We would like to request from your office facilitation of an investigation and inquiry on the legitimacy of the Apo Credit Cooperative,” PEP Davao chapter president, Reuben Baldoza, Jr., said in a letter addressed to Dayanghirang dated September 29, 2009. PEP claims that the Apo Credit Cooperative is still the Phil-Asia Care Plans, Inc. of PACPI.
Baldoza said PACPI, which is engaged in the pre-need business, specifically in the selling of memorial plans and hospitalization benefits, was shut down by the SEC on March 2009 for violation of several provisions of the law. PACPI, however, converted itself into the Apo Credit Cooperative which has since undertaken the functions of PACPI, including collection of premiums and sales.
While the Coalition seeks investigation of the legal infirmities in the constitution and legitimacy of the said pre-need company acting as a cooperative, it is also actively seeking justice for plan holders who have been victimized by other pre-need firms such as College Assurance Plan, Legacy, Prudential Life and Pacific Plan, to name a few.
Pre-need plans are contracts of agreements that cover education, pension, life, interment and other future needs, the benefits of which shall be delivered at the time of actual need. In the meantime, the plan holders are asked to pay the premiums in cash or installment.
Dayanghirang said the approval of the Pre-need Code, which will in turn establish the Insurance Fund, will guarantee the payment of benefits of the plan holders even if the firm collapses.
“At present, pre-need plans do not enjoy insurance coverage unlike bank deposits, so plan holders do not really have an assurance that they can even get their payments back,” he said, adding that even huge pre-need firms could become failures, hence the more reason to strengthen the regulation of the pre-need business.
He said the Code will require providers to set up a trust fund which will serve as the payment guarantee of plan holders in case the company closes down. Up to 60% of the money collected from the plan holders will go to the trust fund under the Code, he added.
Another major change that will occur once the Code is approved and implemented is the change of supervision and regulation of pre-need companies from SEC to the Insurance Commission.
“The Davao City Council is already looking into how it could address this issue as there are a significant number of plan-holders from Davao City,” he said. The matter is already pending with the committee on rules, privileges, laws and ordinances.
In the meantime, Dayanghirang called on the victims of PACPI to initiate the proper legal actions before the courts or quasi-judicial bodies. Lovely A. Carillo