The Insurance Commission (IC) has issued supplemental guidelines on the voluntary cessation and withdrawal of companies from the pre-need business in the Philippines.
In a circular letter dated August 16 signed by Insurance Commissioner Reynaldo Regalado, the IC said it observed that the existing guidelines on the voluntary cessation should include those on the treatment of unclaimed benefits, surplus in trust funds and residual corporate freehold assets.
The guidelines apply to any domestic pre-need company that intends to voluntarily stop the sale and registration of pre-need plans and withdraw its business in the country.
“To satisfy this commission that all benefits will be settled by the company, a post-closure distribution for all unclaimed and unreleased benefits shall commence after the commission’s approval to terminate the servicing proceedings of the company,” the IC said.
“Hence, servicing pre-need companies who already complied with all the requirements of this commission but the distribution has not yet been completed despite efforts to reach the remaining planholders concerned may apply for early termination of its servicing proceedings and final closure if the following conditions are met,” it added.
The conditions are that funds for distribution exclusively for the planholders and the expense fund have been separately earmarked; distribution should be completed except for a number of still unclaimed checks or distribution has been ongoing for at least five years solely because of the remaining unclaimed, unreleased, suspended or abandoned benefits, or at least 50 percent of the distribution checks have been claimed/released; contingent fund has been earmarked for contingent liabilities or suspended benefits, if any; and an extensive distribution plan for any unclaimed, unreleased or suspended benefits or abandoned benefits or net abandoned benefits has been submitted and approved.
After the termination of the servicing proceedings, the commission shall continue the distribution using the same post-closure distribution, the IC said.
In this case, the commissioner may designate a distribution office.
“The remaining trust fund assets of the company including the excess assets and those considered as unclaimed benefits shall be immediately turned over to this commission prior to the commission’s approval of the company’s voluntary cessation and withdrawal of pre-need business,” the circular said.
“Original copies of the certificates of title, or any ownership documents for non-liquid trust fund assets, if any, shall also be turned over to the commission for safekeeping,” it added.
For renamed companies with repurposed operations that continue their corporate personality, the IC said the residual corporate freehold assets shall remain with the said company available for continued operations.
In case the company decides not to continue its corporate personality, the corporate assets shall be distributed to its stockholders upon dissolution or expiration of term, or as may be allowed by law, the IC said.
