After reading On Annual Pre-Need Reserve Valuation Report of Pre-Need Companies, read also Duties of Actuaries for Pre-Need Companies
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Every pre-need company shall annually determine its reserve requirement and contractual liabilities
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Every pre-need company shall submit to the Insurance Commission its Pre-need Reserve Valuation Report, Audited Financial Statements, and its Statement of Trust Fund
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The Insurance Commission is authorized to suspend or revoke all certificates of authority granted to such pre-need company
The Pre-need Code of the Philippines or Republic Act No. 9829 provides that every pre-need company shall annually determine its reserve requirement and contractual liabilities, and submit to the Insurance Commission (Commission) an annual pre-need reserve valuation report.
What is contained in the valuation report?
The law says:
The valuation report shall contain the assumptions, methodology, formulas used, a summary of the pre-need plans that were the subject of the valuation and the results of such valuation. The reserving formula, bases and limits of the assumptions to be used in the valuation of reserves shall be prescribed by the Commission.
The Commission may also require any pre-need company to submit an interim pre-need reserve valuation report if any of the following events occurred:
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When there is sufficient evidence that a subsequent event or transaction occurred after the end of the fiscal year and such event would materially affect the computation of the pre-need reserve valuation report submitted; and
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When the company ceased operation six (6) months after the end of the fiscal year.
Furthermore, every pre-need company shall terminate its fiscal period on the thirty-first (31st) day of December every year. Within one hundred twenty (120) days after the calendar or fiscal year, the pre-need company shall render to the Commission annual financial statements signed and sworn to by its chief executive officer, chief finance officer and external auditors in accordance with a uniform accounting system that shall be prescribed by the Commission, showing in such form and details the exact condition of its affairs.
Moreover, every pre-need company shall file with the Commission an annual statement of its trust fund for each type of plan. Such statement shall be in a form prescribed by the Commission and shall include details as to all of the income, disbursements, assets and liability items of and associated with the said trust fund accounts. Said statement shall be made under oath by two (2) officers of the company and shall be filed simultaneously with the annual audited financial statement.
May the Commission examine the financial condition of every pre-need company?
The law says:
The Commission shall, at least once a year and whenever it considers that the public interest so demands, cause an examination to be made into the affairs, financial condition and method of business of every pre-need company, and of any other person, firm or corporation managing the fund or affairs and/or property of such pre-need company.
If the Commission is of the opinion, upon examination or other evidence, that any pre-need company is in an unsound condition, or that it has failed to comply with the provisions of law or regulations, or that its condition or method of business is such as to render its proceedings hazardous to the public or to its planholders, or that its paid – up capital stock is impaired or deficient, the Commission is authorized to suspend or revoke all certificates of authority granted to such pre-need company, its officers and agents, after due notice or hearing.
The Commission may not lift the order of suspension or revocation of the said authority until the concerned pre-need company shall have submitted a viable business plan showing the company’s estimated receipts and disbursements, as well as the basis therefor for the next succeeding three (3) years.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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