Insurance Commissioner Emmanuel Dooc: Upward trajectory. PHOTO FROM INSURANCE.GOV.PH
MANILA, Philippines—The preneed industry registered modest growth in 2013 as the increase in demand for memorial and pension plans more than offset the drop in sales of educational plans, the Insurance Commission reported.
In an interview with the Inquirer, Insurance Commissioner Emmanuel Dooc said the total value of preneed plans sold last year amounted to P24.49 billion, up by 3.92 percent from the previous year’s sales.
“Some preneed firms are making inroads in the market. The industry as a whole is on an upward trajectory, although the growth is still not very significant,” Dooc said Wednesday.
Among the three business lines in the preneed sector, memorial plans are the biggest. Value of sold memorial plans last year accounted for bulk, or P21.12 billion, of the total industry sales. This amount marked an annual rate of increase of 4.57 percent.
The increase in sales of memorial plans came amid observations that financial literacy of Filipinos was improving along the Philippine economy’s robust expansion.
Pension plans, which are a far second to memorial plans in terms of sales, accounted for P3.095 billion of the total industry sales last year. This represented a 0.34-percent expansion year on year.
On the contrary, educational plans suffered a drop in sales amid a steep decline in number of industry players offering the said instruments.
Dooc said that last year, the number of preneed companies offering educational plans fell to just three from 21 the previous year.
He said many preneed firms offering educational plans stopped selling the said instruments given weak demand and losses carried over from the use of the old educational business model.
Some preneed firms also found it difficult to meet the capital requirements.
Under the old model, preneed firms were selling open-ended instruments. These instruments cover the cost of college education of beneficiaries of plan holders regardless of how high it rises.
One of the preneed firms that collapsed last year was Prudential Plans Inc. (PPI), which had about 245,000 policy holders. PPI was engaged in all three lines of preneed business, but its losses were largely driven by education plans.
Learning from the bad experience of the industry, the Insurance Commission now prohibits firms from selling open-ended instruments. What the regulator allows is sale of educational plans that state specific cost of coverage.
Dooc said the preneed industry was expected to continue posting at least a modest growth this year. He said the remaining industry members improve their business strategies and beef up their marketing campaign.
Also, Dooc added, the Insurance Commission intends to maintain more prudent regulatory standards to help the industry grow.