Press Release
July 8, 2006


To regulate pre-need companies and, more importantly, to protect the interests of planholders, Senator Edgardo J. Angara today pushed for the establishment of a comprehensive Pre-Need Code, where the regulatory power of the Securities and Exchange Commission (SEC) will be transferred to the Insurance Commission (IC).

Addressing the issue on the pre-need sector in the wake of the educational plans fiasco, Angara explained that there are five bills now pending before the Senate Committee on Banks, Financial Institutions and Currencies, of which he is chairman. Three were filed for a pre-need industry establishment and two for pre-need planning; its security and options, respectively. At least four committee hearings have been made on the Pre-Need Code in the 2005 legislative calendar.

Angara said that the outstanding provisions of these bills would be drawn and consolidated into one landmark law to regulate the pre-need firms and to lessen the woes of planholders today.

"The pre-need sector is a vital part of the national economy, and it has to realize its full growth potentials. The regulatory framework, in turn, will provide the environment that will allow the pre-need firms to be stronger, bigger, and more stable so that we would avoid the same problems in the future," said Angara, who placed second in the Senate's top authors at the end of the thirteenth Congress.

Angara noted that there are close to four million planholders today and that the trust fund alone totals 66 billion pesos. Angara also noted that a total of 92 preneed firms have been registered for the last 25 years. In 2005, however, the number of preneed companies licensed to operate suddenly went down to 32.

Based on the recent findings of his committee, Angara said that the major factor that caused the failure of some companies is the issuance of traditional educational plans, which consists of 21 percent of the total number of plans sold as of 2003.

Angara said that under a traditional educational plan, the issuing preneed company guarantees the payment of the actual cost of services promised regardless of the increase from the originally assumed values.

"The deregulation of tuition fees in 1992 resulted in the unforeseen tremendous increase in the obligations of preneed companies," Angara said. "Another factor that contributed to the problem is bad management and investment decisions made by preneed companies. These actions have not been properly regulated by the SEC for a long time, in view of the lack of funding and regulatory framework for the industry. That is what we hope to change," he continued.

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