The ‘free look’ concept was broached by pre-need firm Berkley International Philippines, Inc. to allow buyers to examine the product first as well as the company behind it. Berkley proposed that this be adopted by the entire pre-need industry to enhance investor confidence.
With the ‘free look’ concept, pre-need companies could give planholders a certain period of time to study the contract and decide whether they want to pursue the sale.
SEC chairman Lilia R. Bautista said: "I think it’s a good one. The industry should consider it. This will further professionalize the industry."
Bautista said planholders can utilize the period to research and inquire about the pre-need company, ensuring its financial commitments as stipulated in the policy contract.
The free look is like a free trial with money-back-guarantee that allows new planowners to exercise due diligence on the product as well as the company. The planholders can study in detail the provisions of the contract and the product’s suitability to their needs.
Berkley said implementing the free look is a positive measure that would strengthen the industry and weed out, in the long run, undeserving players who are not capable of fulfilling their financial promises to the public.
With the economic conditions not expected to recover over the near term, the SEC is further tightening the monitoring of the financial and operational condition of pre-need companies.
The SEC is looking at increasing the frequency of its on-site inspections to ensure the solvency of pre-need companies and the protection of planholders. It intends to conduct through on-sight, unscheduled inspections of pre-need companies at least twice a year.
It is also looking at reviewing the sales and advertising practices of pre-need companies. It plans to issue guidelines on pre-need advertisements.
The SEC said that over the past four years, more than half of all pre-need companies experienced trust fund deficiencies which deteriorated to P5 billion in 2001.
The SEC is also pushing for the immediate passage of the Pre-need Code to strengthen public confidence and minimize losses to planholders in the event of the insolvency of a pre-need firm.