Pre-need industry assures clients
Sun Star Cebu
May 3, 2005
WITH the fears brought on by ailing pre-need companies to their plan holders recently, the other industry players are assuring their clients that there is no need to worry.
“The peace of mind of our plan holders is a paramount need for our industry,” said Juan Miguel Vazquez, president of the Philippine Federation of Pre-need Companies, in an interview via electronic mail Sunday.
In a press statement last month, Sen. Mar Roxas, chairman of the Senate committee on trade and commerce, said he intends to conduct “financial forensics” on distressed pre-need firms.
He said this after another financially ailing pre-need provider, Pacific Plans Inc., with 34,000 plan holders, sought protection from creditors.
Earlier, the Securities and Exchange Commission prohibited the College Assurance Plan (CAP) from selling plans after mounting complaints by its plan holders, who had either received bouncing checks or did not get benefits at all.
“The ailing pre-need firms with open-ended plans make up a small portion of the pre-need industry. Its problem should not jeopardize the greater part of us,” Vazquez added.
He said traditional plans, which are affected by inflation, have been phased out by majority of the pre-need companies. Only about 12 out of the 39 to 40 listed pre-need companies sold traditional education plans. Some do not even carry education plans at all.
Vazquez, also president of Permanent Plans Inc., which sells education and pension plans, explained that there are three pre-need products—education, life and pension.
Life and pension plans are “fixed value” plans.
Problems were experienced in traditional open-ended education plans, which guarantee inflation, he further explained.
“But even with respect to this type of plan, only Pacific Plans has admitted its problems. CAP’s position is that it is having liquidity issues (but assured it) will cover its plans. The (pre-need) industry’s over four million plan holders, therefore, don’t really need to worry. Unfortunately, they (plan holders) mistake CAP and Pacific Plans (for) the industry. We are grateful for this opportunity to explain this problem,” Vazquez also told Sun.Star Cebu.
“As to the problem of CAP and Pacific Plans, we are very interested in (finding) solutions and we are observing and studying ways (where) we can help (them),” Vazquez assured.
He also suggested that firms with problems like CAP and Pacific Plans should come out and communicate with their clients. (ALC)
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