The Department of Finance (DOF) is considering a plan to increase by five times the capitalization requirements of pre-need firms to ensure the sustainability of its business.
Finance Secretary Cesar Purisima said the increase in pre-need companies’ capitalization is targeted to avert closure of pre-need firms due to financial issues just like what happened recently to Prudentialife Plans, Inc.
He said the proposal to increase capitalization requirements for the pre-need industry is now being studied by the Insurance Commission (IC) and the increase depends on how many products a pre-need firm is offering.
“We need to have a pre-need industry that is sustainable for just like the insurance industry, it is the families investing for their future who will suffer should a company suddenly ask for rehabilitation,” he said.
Purisima said implementation of the increase in capital may be done “in a staggered basis” to “give firms time and space to adjust to the new requirements.”
Under Section 9 of Republic Act No. 8929, otherwise known as the Pre-Need Code of the Philippines, the IC “may prescribe a higher minimum unimpaired paid-up capital for pre-need companies.” IC is under the supervision of the Finance department.