Pre-need Code Regulation Act Philippines

All pre-need companies fall under the exclusive supervision of the Insurance Commission.
The Commission is empowered to reorganize itself for effective function, with exemption from usual government compensation laws.
The Commission has broad powers: licensing, fee fixing, regulation, investigation, sanctioning, cease and desist orders, examination, and policy formulation.

SEC cannot approve incorporation of pre-need companies without favorable recommendation from the Commission.
Amendments to articles of incorporation require Commission approval.
Specifies minimum paid-up capital based on types of plans sold.
Operation as a pre-need company requires annual licensing by the Commission.
Directors/officers must meet qualifications and not be disqualified under specific grounds including criminal convictions or insolvency.
Pre-need companies must have at least two independent directors or 20% of the board, whichever is higher.
Directors/officers are restricted from excessive investments in entities in which the trust fund has interests.

Pre-need companies must file a registration statement for each plan within 45 days of licensing.
Requirements include board resolutions, viability studies, financial statements, plan copies, sales materials, and accredited actuary certification.
The Commission approves contract forms and advertising materials; unapproved advertising is prohibited and penalized.
Mandatory information disclosure to prospective planholders including plan features, default, reinstatement periods, and return rates.

Sales counselors must be licensed, meet moral qualifications, complete Commission-approved training, and pass an exam.
Licenses expire annually with provisions for renewal.
Grounds for denial, suspension, or revocation include fraud, misrepresentation, and analogous misconduct.
General agents require Commission licensing.

Pre-need contracts must include a minimum 60-day grace period.
Lapsed plans may be reinstated within two years.
Pre-need companies must notify planholders before cancellation.
Planholders can terminate plans anytime with entitlement to predetermined termination values.

Unfair claims settlement practices are prohibited, including misrepresentation and unjustified claim refusal.
Scheduled benefit plan proceeds must be paid promptly on maturity; delays incur interest penalties.
Contingent benefit plans have specific payment timelines.
Planholders may pursue legal action for recovery in cases of insolvency or fraud.
Delays in claim payments subject companies to damages and attorney's fees.
Dividend declarations are regulated to ensure capital and trustfund remain unimpaired.

Separate trust funds are established per plan category, funded from planholder payments.
Trust assets are for the exclusive benefit of planholders and protected from creditors.
Regulations on deposits, management, investment restrictions, and trustee responsibilities are detailed.
Investment options include government securities, deposits, commercial papers, corporate loans with security, equities, and real estate, subject to maximum limits.
Annual actuarial reserve valuation and deficiency funding are mandatory.
Liquidity reserves must cover specified percentages of trust funds.

Required actuarial reports cover contract liabilities, assets, projections, and product studies.
Actuaries must report matters needing Commission intervention.
Grounds for disaccreditation include conflict of interest, neglect, and misconduct.

Pre-need companies must submit annual reserve valuations, audited financial statements, and trust fund statements within specified deadlines.
Financial statements must be accurate and are subject to penalties for misstatements.
The Commission conducts annual examinations and can order interim valuations.

The Commission prescribes accounting rules and regulations, including format and measurement standards.

Grounds include unsound condition, failure to comply, hazardous business methods, and impaired capital.
Suspension or revocation follows notice and hearing, with business cessation until compliance.

The Commission may appoint conservators to manage troubled pre-need companies.
Conservators have broad authority to preserve assets and reorganize management.
Insolvent companies face receivership and possible liquidation ordered by the Commission.
Liquidation involves asset collection and distribution to planholders and creditors by priorities.
Commission actions in insolvency cases are final unless shown to be arbitrary and in bad faith.
The Commission may take custody of the trust fund in liquidation.

Administrative sanctions include cease and desist orders, license suspension, revocation, fines, and disqualification.
Unauthorized sales and false advertising carry escalating fines and license suspension or revocation.
Criminal penalties include imprisonment and fines for unauthorized selling, fraud, negligence, and repeated violations.
Penalties apply to individuals and juridical persons; deportation is prescribed for alien offenders.

The Commission has primary jurisdiction over claims; decisions on claims under P100,000 are final.
Appeals from Commission orders go to the Court of Appeals.
Existing registered companies must comply with the Code within prescribed timeframes.
The Commission must issue implementing rules within 60 days of approval.
Provisions provide for separability and repeal of inconsistent laws.
The Act takes effect upon approval.