Philippine lawmakers are treading carefully on a proposal for the government to create an insurance agency that would protect policyholders of troubled pre-need companies, after learning that no feasibility study had been conducted on such a proposal.
The Pre-Need Insurance Corporation being deliberated is to safeguard the interests of policyholders by providing cover on pre-need contracts. Pre-need companies, first established in 1968, set up trust funds covering education, health care, pension and death memorial services.
The lawmakers began deliberations on the insurance agency during their investigations into the recent collapse of the Legacy Group of rural banks and pre-need companies. The industry was reported to have a deficit of PHP47 billion (US$996 million) at 30 June 2008, and the year-end figures are expected to have worsened. Several other pre-need companies are said to be on the verge of going under.
The Securities and Exchange Commission (SEC), which oversees the pre-need sector, and the Insurance Commission which will take over such regulatory duties from the SEC, have been asked to conduct a feasibility study to ascertain whether the Pre-need Insurance Corp would be viable.
The lawmakers want to avoid a situation in which pre-need firms could shirk their responsibilities to policyholders if a government-run insurance agency was to bail out troubled trust companies.
The Pre-Need Insurance Corporation being deliberated is to safeguard the interests of policyholders by providing cover on pre-need contracts. Pre-need companies, first established in 1968, set up trust funds covering education, health care, pension and death memorial services.
The lawmakers began deliberations on the insurance agency during their investigations into the recent collapse of the Legacy Group of rural banks and pre-need companies. The industry was reported to have a deficit of PHP47 billion (US$996 million) at 30 June 2008, and the year-end figures are expected to have worsened. Several other pre-need companies are said to be on the verge of going under.
The Securities and Exchange Commission (SEC), which oversees the pre-need sector, and the Insurance Commission which will take over such regulatory duties from the SEC, have been asked to conduct a feasibility study to ascertain whether the Pre-need Insurance Corp would be viable.
The lawmakers want to avoid a situation in which pre-need firms could shirk their responsibilities to policyholders if a government-run insurance agency was to bail out troubled trust companies.
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