Prudentialife Plans told to stop payment of claims

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The government has ordered preneed firm Prudentialife Plans to suspend payment on all claims but continue payments for some terminated plans as it awaits action from the Insurance Commission (IC) on its proposal for relief and rehabilitation.

Prudentialife failed to keep itself afloat after losing its license and permit to sell new plans in 2009, and now is short of at least P10 billion in funds to cover obligations to some 300,000 clients.

At the same time, Philippine Prudential Life Insurance Corp. was quick to clarify that it is not the company that is in financial trouble.

In a stay order that Prudentialife received on February 6, conservator Rosario S. Bernaldo of the IC told the company that payments of claims has been suspended indefinitely until the regulator has decided with finality on the firm’s proposal for rehabilitation.

Prudentialife has been placed under conservatorship—in particular, under the authority of the IC through Bernaldo—since September 2010, a year after the Securities and Exchange Commission stripped it of its license and disallowed the sale of new plans.

The order also prevents Prudentialife from disposing of any property and paying any of its liabilities, as the company itself requested through the proposal.

Plan holders, creditors and stakeholders are advised to file with the IC their comments on the rehabilitation proposal, and to attend hearings on March 2 and 13.

In its proposal filed last December 9, Prudentialife asked to be allowed to undergo rehabilitation instead of liquidation.

Company president Jose Alberto T. Alba said in its rehabilitation proposal that Prudential wants to keep its life-insurance operations and spin off its pension and education plan businesses.

Alba said that as of Sept. 30, 2011, Prudentialife’s assets were valued at a total of about P9.15 billion while its liabilities were estimated at P19.67 billion.

While Prudentialife has enough funds to cover life plan claims, it expects to pay a total of some P10.5 billion on pension and education plan claims.

The company blames the deterioration of its finances to “an old basket of plans that guaranteed high benefits” but which were based on “assumptions that were proven then, but were not sustained due to subsequent events beyond (the company’s) control.”

Also, Alba said company obligations mounted because of “open-ended traditional education plans,” which were based on the assumption that the tuition hike ceiling of 10 percent a year would be maintained.

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  • brewny

    national life insurance co. will follow?

  • Beersheva

    As always, the poor powerless plan holders lose.

  • Jurel Tampadong

    indeed a very sad and tragic news for those plan holders. like them, i have also availed insurance from another company, in the future, i was thinking that if the same scenario happened to me ie: walang pang-tuition ang anak at insurance lamang na pinagput$^$&$% ko nung ako’y malakas pa ang aking inaasahan tapos di pala maasahan, wag sanang itulot, baka gumaya na rin ako dun sa mga taong umaakyat sa mga billboard sa edsa. 

    sa kabilang banda,  dapat merong managot sa batas kapag merong kapalpakan ang isang kumpanya na pinagkatiwalaan mo ng perang pinaghirapan mo eh

  • sephgabriel

    What now? Whar will happen with the hard earned investments of the policy holders?. What is the role of SEC and IC with regards to rights of the plan holders? Is it just like that loosing your investments without any sanctions for the officials of the company, just like what happened with CAP et al. Officers got scot free from law suit and penalties? Are there any provisions just like PDIC where depositors are entitled to a maximum of Php 500,000.00 insurance in case the bank collapses? If i invested or paid the total amount of 650,000 For the pkans, will i not be entitled to at least a nature of a maximum refund insurance in case the insurance company goes bankcrupt? Any liabilities from IC or SEC being the entity mandated to safeguard the welfare ofvthe planholders?

    • http://pulse.yahoo.com/_ATUKZDPAC57OLUAVID6ZONAZTA Angelic Angel

      Sadly, insurance losses are not covered by PDIC. You have to read the fine print in the contract. It says that any losses will be shouldered by the planholder. 

  • http://pulse.yahoo.com/_JWHQQBHJHXFWVWH3N7TJR2QURU Anthony

    That is why people have lost faith in educational pre need plans. The incident involving College Assurance Plan (CAP) was a painful learning experience not to trust the promise of future payments while the company and its agents enjoy present value. After that, never will I trust educational pre need companies! Just put your money in a good stock paying dividends, buy gold as a hedge, and real estate for a roof above your head.  That is better than letting your money sit in these companies which promises are meant to be broken shielded by the legal system.

  • http://pulse.yahoo.com/_JWHQQBHJHXFWVWH3N7TJR2QURU Anthony

    Next time an insurance agent approaches you, just give him or her a cold shoulder or a dirty finger. Do the investing yourself with a balanced fund of Treasury Bills, Bonds, Stocks.  It is much better than relying on a future promise from insurance companies specially educational plans.

    • delpillar

       oo nga minsan ang mga insurance agent na yan, katulad ng Family First noon ay nasa SM or other malls at magbibigay ng bag or freebies then pinapapirma ka na pala ng insurance habang nagfi-fill-up ka ng survey kuno.

      Some go to Facebook or Linkedin para malaman ang numbers mo or office phone at magse-sales talk pa sa yo through phones.

      Bagsakan nyo ng Telephono ang mga scumbags na yan.

  • delpillar

    Yung Pryce PRENEED Plan ay walang pambayad din PRYCE-LPG Gas Tank daw ang ibabayad kung OK lang sa planholder claimants.

    PRENEED plans daw ay di cover ng SEC at Insurance kaya PASENSYAHAN na lang kapag balasubas ang PRENEED firms

  • barok

    manage your own finances, wag iasa sa mga sinungaling at balasubas na preneed companies.

  • http://joboni96.myopenid.com/ joboni96

    a pdic – like government agency
    for the pre need industry
    is a possible solution
    with strong monitoring powers

  • Littlefox131

    Another one bites the dust… and blames it on everything else but themselves.

  • KurakotNaPinoy

    Philippine Prudential Life Insurance Corp. was quick to clarify that it is not the company that is in financial trouble – kalokohan ito, kung di ka makapagbayad ng mga naniningil sayo ibig sabihin lugi na negosyo mo.

    Wala din kasi kwenta yung Insurance Commission, pag nagsasara yung mga pre-need providers yung mga pre-need holders ang nawawalan ng pera hindi naman yung Insurance Commission.

    HAHAHAHA.

  • London Eye

    Everything in the Philippines is a scam. I paid millions into this education plan, just to loose the lot with no compensation. These people are getting rich at the expense of us poor planholders.
    Bloody nightmare living in the Philippines, it going to fouth world , not third!……

  • http://pulse.yahoo.com/_AYITA5V33GYZSLC3G37UCVNTKA Ben

    Filipinos should think of the Treasury bills as their new investment option..it is a solid as a rock backed up by the good faith of the country and they will owe a portion of the government`s debt.

    Continuing to be gullible will only cause for more miseries, this is not the only case that occurred…remember the CAP the first one to cruble? That should give you an idea that this kind of pre-need insurance will not last long.

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