Pre-need companies have asked the Securities and Exchange Commission (SEC) for a three-month grace period to come up with their capital buildup plans and assess whether or not they could still continue their operations.
At the moment, pre-need firms have two options they could take to avert the collapse of the industry, Juan Miguel Vasquez, president of the Philippine Federation of Pre-need Plan Companies Inc., told a Senate hearing on Tuesday.
He said pre-need firms could choose to stop selling policies, undergo restructuring and settle with plan holders, or undergo a re-capitalization program to plug the deficit in their trust fund.
But Vasquez said those opting to do the latter would need more time to come up with their capital buildup plans, noting that the February 15 deadline set by the SEC was "not practicable."
"In those three months, what we're hoping is that the capital buildup plans would have been reviewed and approved by our regulator," he said.
Vasquez earlier said it could take them a few years to beef up their capital base and cut off their trust fund deficit.
SEC chair Fe Barin said the commission en banc would meet on Thursday to discuss the requests of the pre-need companies.
She added that they would study thoroughly each of the companies' proposals for capital buildup.
"If a plan is not realistic then it is not going to be accepted," Barin said.
Barin noted that plan holders may continue paying their premiums because "they can still be protected" by the existing trust fund of operating pre-need firms.
'We can still pay'
Vasquez has assured that the federation's member companies could still pay all valid claims of plan holders up to the next five years.
"Liquidity is not an issue at present, we can still pay the benefits. What we're worried about is the future," he said.
Much of their trust fund had been invested in government securities and stocks, whose yields have gone down because of the global financial crisis.