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Manila Bulletin devider Business devider Pre-need firms recover from heavy benefit claims

Pre-need firms recover from heavy benefit claims

From January to September

Published Dec 13, 2023 07:17 am

At A Glance

  • The pre-need industry showed signs of recovery, bouncing back from heavy benefit claims recorded from January to September 2022, the Insurance Commission reported.<br>At end-September, the industry reported a net income of P1.79 billion, a reversal of the P7.11 billion net losses incurred during the same period the previous year. <br>IC said the industry's net loss in the previous year was primarily due to substantial losses resulting from benefit payments for pre-need policies.<br>As of the end of September, the pre-need sector had invested a total of P124.23 billion in trust funds. In contrast, the amount reserved for benefit payments for all pre-need plans sold plus benefits already payable, known as pre-need reserves, stood at P119.13 billion.

The Insurance Commission (IC) reported on Wednesday, Dec. 13, that pre-need companies bounced back from the high benefit claims the industry experienced last year.

In a statement, IC said that the pre-need industry reported a net income of P1.79 billion from January to September this year, marking a turnaround from the P7.11 billion net losses recorded in the same period last year.

In 2022, the pre-need industry had a big loss in the first three-quarters after it paid out a substantial for pre-need policy benefits.

“In terms of ability to service benefit claims under all the pre-need plans that they sold, pre-need companies also increased their surplus in trust funds,” IC said.

At end-September, the sector had invested P124.23 billion in trust funds. Meanwhile, its reserves, which represent the amount set aside for benefit payments for all pre-need plans sold plus benefits already payable, amounted to only P119.13 billion.

“This amounts to a surplus in trust funds in the amount of P5.09 billion, which is 380 percent higher than the surplus in trust funds as of the third quarter of 2022,” the commission said.

Meanwhile, pre-need companies collected a total premium income of P16.70 billion from January to September, higher by 8.3 percent compared to P15.43 billion collected in the same period last year. 

The IC attributed this rise to the increased sale of pre-need plans during the first three quarters of the year. 

According to IC data, nearly 600,000 pre-need plans were sold, representing a 13 percent increase from the corresponding nine-month period in 2022. 

The majority of the pre-need plans sold are memorial plans.

Related Tags

Insurance Commission Pre-need insurance
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