Bigger capital for pre-need companies eyed
The Insurance Commission is studying a possible increase in the required capitalization of pre-need firms by five times the current levels, Finance Secretary Cesar V. Purisima said Wednesday.
This comes amid the financial troubles of pre-need firm Prudentialife Plans Inc., which has a proposal for rehabilitation pending with the IC.
Earlier, the IC ordered Prudentialife to stop payments of planholders’ claims except those for terminated plans that were in process as of Feb. 6.
“We need to have a pre-need industry that is sustainable just like the insurance industry, it is the families investing for their future who will suffer should a company suddenly ask for rehabilitation,” Purisima said.
He added that the implementation of higher capital requirements could be done “on a staggered basis to give firms time and space to adjust to the new requirements.”
Under the Pre-Need Code of 2009, pre-need firms that offer one type of plan—such as life, pension, education or interment—must have a minimum of P50 million in paid-up capital.
Pre-need firms that offer two types of plans must have at least P75 million while those that sell three or more types of plans must have at least P100 million.
However, the law also gives power to the IC—which is under the supervision of the Department of Finance—to “prescribe a higher minimum unimpaired paid-up capital for pre-need companies.”
There are bills filed in both chambers of Congress proposing to amend the Insurance Code to prescribe higher minimum paid-up capital for insurers to further strengthen their financial conditions.
This would be significantly higher than the required minimum paid-up capital of P125 million as of 2011.
