Philippines Pre-Need Code - Implementing Rules & Regulations

Philippines Implementing Rules and Regulations - Republic Act 9829

·      A 21-page (small print) report covering 15 Rules signed by the Insurance Commissioner at the end of March 2010

·      Rule 1   General Provisions

·      Rule 2   Authority of the Commission   (Requires the Securities and Exchange Commission [SEC] to seek recommendations of the IC as a condition to approving any and all corporate matters of pre-need corporations.)

·      Rule 3   Organization, Licensing and Management of Pre-Need Companies   (Requires the SEC to seek recommendations of the IC before allowing changes in corporate Articles of Incorporation, By-Laws, ownership, directors and management.)

·      Rule 4   Registration of Plans

·      Rule 5   Licensing of Sales Counselors and General Agents  (Requires the IC to license all sales counselors and agents.)

·      Rule 6   Default and Termination by Plan Holders

·      Rule 7   Claims Settlement

·      Rule 8   Trust Fund   (The Trust Fund shall at all times be sufficient to cover the required pre-need reserve. This rule attempts to define the Trust Fund in 4 pages. The author, however, feels a need for clarity in the trust fund determination, particularly in the wording of Sec. 35. Just as financial statements are audited by an independent and accredited auditor SO MUST OUTSTANDING PRE-NEED CONTRACTS BE COVERED BY AN AUDIT REPORT.)

·      Rule 9   Actuaries for Pre-Need Companies   (The author questions the relevance of an actuarial report in the pre-need business.)

·      Rule 10   Reports and Examination

·      Rule 11   Financial Accounting Standards   (The Pre-Need Code created the ACTUARIAL RESERVE LIABILIES account to include in the pre-need company’s financial statements Trust Fund liability. The author believes this account must be in connection to an audit report of outstanding plan contracts.)

·      Rule 12   Suspension or Revocation of Authority   (The author assumes that because of: a) the long period without a Pre-Need Code, b) the existence of financially weak pre-need companies, and c) the existence of a large number of pre-need plan holders of financially weak companies ….this section of the Pre-Need Code provides leniency to enable the IC sufficient time to stabilize the industry. The leniency is in the form of permitting pre-need sales to continue despite non-renewal of the company’s Authority to Sell.)

·      Rule 13   Conservatorship and Proceedings upon Insolvency   (Cease and Desist Orders (CDO) are issued by the IC after proper notice and hearings citing specific issues for compliance. This is the prelude to serious action versus the pre-need company.)

·      Rule 14   Administrative Sanctions and Criminal Penalties

·      Rule 14   Miscellaneous Provisions

(Aug 4, 2014 …8:50am 1sr Quarter moon)

Post #6

More to follow ….