Pre-need guarantee law open to abuses, say solons

02/12/2009

Lawmakers yesterday warned of dire consequences should Congress approve a proposed measure creating the Pre-Need Insurance Corp (PNIC). to guarantee payment to planholders of distressed pre-need companies, saying this would open up the industry to abuses by pre-need companies themselves.

At the resumption of the hearing of the House committee on banks and financial intermediaries yesterday, Securities and Exchange Commission (CES) Chair Fe Barin admitted her agency has yet to conduct a study to determine the feasibility of putting up a government-run corporation to insure pre-need plan holders.

“Is there any actuarial study done to tell us that this insurance corporation on pre-need would be viable in the face of these pre-need firms collapsing one after the other?” Albay Rep. Edcel Lagman asked to which Barin replied in the negative. “So how sure are we that this insurance corporation would be viable? Maybe a month after this is organized we will be faced with pre-need companies collapsing, so there has to be a study.”

Lagman motioned for the committee to ask the SEC to present a study in one month before the bill is deliberated.

“What is ideal is that we should be very strict on the establishment and operation of these pre-need companies and other similar firms because we might be sending the wrong message that creating an insurance corporation is the savior, to bail out, in a sense, the obligations of these companies to policyholders. I would be the first to help the policyholders, but I think we should be able to study very well what we are legislating so that, at the end of the day, we solve problems rather than create them,” Lagman said in a later an interview. Charlie V. Manalo

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