The Insurance Commission (IC) has warned the public against transacting with certain preneed companies selling their products without the required license to do business.
“We are currently investigating companies which do not possess a license to operate as a preneed company offering preneed products to the public, specifically memorial chapels and associations offering products which have the features of a memorial plan,” Insurance Commissioner Emmanuel F. Dooc said.
The IC had already issued a cease and desist order against two entities offering a mutual-aid inspired program for senior citizens collecting a fixed amount of money purporting to be a membership fee in exchange for free memorial services.
“The IC issued a cease and desist order against Majar Senior Citizen Damayan preventing it from offering memorial service packages to its members without being licensed by the commission as a preneed company,” Dooc said.
“Another cease and desist order was issued against Cosmopolitan Memorial Chapel preventing it from advertising memorial services packages as it is not a licensed preneed company,” he added.
As of May 2015, there were only 16 companies licensed by the IC as preneed companies, a fact which the IC views as a good indicator for the preneed industry and its clients because only those who are financially stable are allowed to engage in the preneed business.
Under Republic Act 9829, or the Pre-Need Code of the Philippines, the supervision and regulation of preneed companies was transferred from the Securities and Exchange Commission to the IC, allowing for more stringent regulatory requirements to ensure that the commitments of preneed companies to their clients will be fulfilled.
As defined under the Pre-Need Code, preneed plans are contracts, agreements, deeds or plans for the benefit of the plan holders which provide for the performance of future service/s, payment of monetary considerations or delivery of other benefits at the time of actual need or agreed maturity date, as specified therein, in exchange for cash or installment amounts with or without interest or insurance coverage and include life, pension, education, interment and other plans, instruments, contracts or deeds as may in the future be determined by the IC.
Based on the latest data from the IC, there is still a significant demand for preneed plans, especially on memorial/life plans. It remains an attractive investment despite the collapse of other preneed companies in 2009.