Insurance Commission remiss in regulating pre-need firms

Last April 20 and 27, I wrote about how Pryce Plans, Inc. and its president, Salvador P. Escano, treated me over the lump-sum payment of my modest (P300,000) pension plan that the company was obligated to hand over to me in 2008.

After a five-year delay, Pryce Plans tried to coax me to accept either a cash settlement of P108,000 (equivalent to 40% of my claim’s net amount minus 10% service charge) or 80% equivalent in kind: either liquefied petroleum gas or burial plots provided by Pryce affiliates. I rejected both and earned support from readers, including other Pryce Plans victims.

In the past two months, I have been receiving more letters, from victims of Pryce Plans and two other companies: National Life Insurance Company and Prudentialife Plans, Inc. All urged me to take up their fight for “fair treatment,” which I have basically invoked vis-à-vis Pryce Plans.

Certainly their cause deserves all possible support.

 Coincidentally, last week two other Philippine STAR columnists scathingly wrote about the same issue. Here are their parallel thoughts (abbreviated due to space limitation):

On August 7, Cito Beltran (CTalk) wrote:

“Yesterday, I was reminded of another company in the pre-need industry that has squandered the money of investors and now gets a slap on (the) wrist as they are allowed by government to pay back P30,000 for every million pesos invested. If you think that’s an insult, talk to vendors who saved P25,000 for years in order to pay for educational plans only to be paid back P1,200, which does not even cover the cost of transportation, food and hypertension medicines they needed since the company folded up.

“Adding insult to injury… the Insurance Commission, whose only real service is to subdivide and distribute the crumbs and leftovers from what has been misappropriated or stolen, actually gave its seal of approval for the company to pay only a tiny morsel from the fortunes they made. I don’t call that prudential, I call it robbery…”

On August 8, Babe Romualdez (SpyBits) segued:

“It’s been more than a decade since the public was jolted by the pre-need industry crisis which saw many companies going into bankruptcy and rehabilitation because of bad investments, with company owners including their children squandering the money of hapless plan holders, putting up golf courses and resorts — buying yachts, mansions and super high-end cars.

“What’s even more sad… is that our existing laws seem to be letting these “estafadores”  get away with just a slap on the wrist, since the Insurance Commission is allowing the companies to pay a miniscule portion of the plan holders’ total investment as part of the rehabilitation process.”

Beltran suggested that the Justice Department be mandated to take the victims’ cases to court. Romualdez urged the BIR to go after the “fraudulent” companies’ officials/ shareholders.

Both didn’t mention the names of the pre-need companies they had excoriated, but most likely they have the names of the firms and their key officials/stockholders.

In this column, I have named three companies. And since I have detailed my case against Pryce Plans, in subsequent columns I’ll provide specifics regarding the cases of NLIC, headed by Benjamin L. de Leon, chairman and president, and PPI, with Jose Alberto T. Alba as president.

In 2006 the Insurance Commission placed NLIC under conservatorship. Yet its margin-of-solvency deficiency (or capital inadequacy), P240 million in 2002, ballooned to P2.1 billion by 2012.

On the other hand, the IC placed PPI under receivership in 2012 when it was already in a financial sinkhole, then ordered its liquidation on July 11, 2013.

Due to limited space, I’ll just dwell now on the Insurance Commission’s accountability for the trust-fund mismanagement’s dire consequences to the thousands of policy/plan holders, the insurance and pre-need industry, and the economy.

Beltran and Romualdez upbraided the IC for merely giving errant companies a slap on the wrist. However, as the government regulatory body for insurance and pre-need firms, the IC should be called to account for being remiss in performing its mandate to safeguard the public’s (policy/plan holders’) investments.

NLIC and PPI policy/plan holders blame the IC for both its actions and inactions, which often favored the companies’ interests rather than theirs as the insuring/investing public.

For instance, the IC failed to exercise its power to compel the NLIC, as provided by law, to infuse more capital to fill up its MOS deficiency and prevent its ballooning to P2.1B. It also failed to question the alleged transfer of NLIC funds and assets to subsidiaries, and the selling of policies, not approved by the IC, in the period the firm’s license was revoked.

On April 11, 2011, 50 policyholders wrote to the IC about their concerns, urging it to “impel” NLIC to guarantee the immediate payment of what was due them. No action.

On September 13, 2012, 76 policyholders submitted to the IC a 27-point complaint against NLIC. They requested a meeting among the NLIC, IC, Finance Department (which supervises the IC) and policyholders. No action. 

Finally four meetings were held in the months of April, May, June, and July 2013. But no issue was resolved.

 Attention, Insurance Commissioner Emmanuel T. Dooc!

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