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Monday, February 07, 2005
Payback sought for clients of pre-need firms
By Linette C. Ramos
CEBU CITY -- In the wake of reports on the cash flow problems of the College Assurance Plan (CAP), a Cebu City Councilor wants the Senate to create the Planholders' Protection Fund.
Councilor Arsenio Pacaña expressed his support for Senator Mar Roxas' Senate Bill 1986, which seeks to protect policyholders' interests from the effects of unexpected collapse or closure of pre-need firms.
The proposed protection fund states that planholders of bankrupt pre-need firms may claim up to P100,000 each from the fund within six months after filing.
Its operation will be similar to that of the Philippine Deposit Insurance Corp., the agency that insures depositors' accounts in banks.
"At present, planholders of pre-need firms have no means of recovering any of the money they invested in the event these firms collapse," Pacaña said.
In a proposed resolution, he lauded Roxas for sponsoring the bill and urged him to call for a nationwide public consultation.
He said "the protection of planholders' investments and the integrity of pre-need firms expediently require public support."
Thousands of CAP policyholders have complained against the educational plan provider, after schools refused to honor CAP checks, following reports that the country's largest provider is on the verge of bankruptcy.
If SB 1986 is approved, all pre-need firms in the country will be required to contribute an initial amount of P1 million each to the fund.
To sustain its growth and viability, a contribution of one-half of one percent of total payments made on existing plans shall also be remitted quarterly to the fund, and any income generated by it shall remain with the fund.
The City Council is scheduled to deliberate on the proposed resolution during their regular session this Wednesday.
(February 7, 2005 issue)
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