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Thursday, May 26, 2005
Pre-need industry stable: Philam exec
By Stephen Capillas
THERE is a need to assure the Filipino public that the country's pre-need industry remains stable despite the recent cases involving two major pre-need firms College Assurance Plan (CAP) and Pacific Plans Inc.
Philam Plans President and Corporate Executive Officer (CEO) Jesus G. Hofileña reiterated this point in last Friday's press conference, saying that the country's pre-need firms should convince the public that not all of them are affected by the crisis.
There were reports that CAP and Pacific Plans Inc. are experiencing financial difficulties and are thus unable to immediately release benefits to their plan holders.
Hofileña, who is also president of the Confederation of Pre-Need Firms in the country, said their group adopted a fixed rate plan instead of the traditional open-ended pre-need plan as protection for their clients.
He explained that both CAP and Pacific Plans Inc. used the traditional open-ended plan back in the 80s and 90s owing to the more stable investment climate during that period.
"The economy was relatively stable for a while as the interest rates were still up, there was the real estate and the construction booms and the tuition rate then wasn't deregulated as it was now," Hofileña said.
However things changed, he said, when the Asian crisis occurred in 1997 causing a sharp drop in the interest rates and eventually affecting the financial stability of these firms.
The major factor, however, lies in the national government's approval to raise the ceiling of school tuition of up to 15 percent.
"Of the 800,000 plus pre-need plan holders, 596,000 are CAP plan holders. As a result of the CAP situation the people are now nervous about investing in pre-need plans and (we need to change that mindset)," Hofileña said.
Aside from this the Philam Plans official said the government should address the deregulation of school tuition and added that the Securities and Exchange Commission (SEC) must monitor individual pre-need firms to determine if they are in fiscal crisis.
(May 26, 2005 issue)
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