The Insurance Commission on Thursday threatened to shut down pre-need company Loyola Plans Consolidated after its thrust fund fell short to serve the claims of 100,000 plan holders.
IC said it gave Loyola Plans until Monday to explain why it should not be placed under conservatorship and why it should not be ordered to stop operations. The agency served Loyola Plans a show-cause order dated April 11 and gave the company five working days to respond to the order.
Loyola Plans, one of the pioneers in the pre-need industry controlled by the Puyat family, provides educational and memorial plans.
A number of Loyola plan holders complained on social media that the company failed to service their educational claims this year, after the company reportedly registered a thrust fund deficit.
Loyola Plans has major investments in real estate, such as memorial parks. It had total assets of P3.75 billion as of end-2015.
“Loyola Plans should explain to the commission within five days from receipt explaining why it should not be placed under conservatorship and why it should not be ordered to cease and desist from engaging in pre-need business,” the order stated.
IC said it received 95 informal complaints from Loyola Plans’ policyholders as of March 31, 2016.
Insurance Commissioner Emmanuel Dooc warned that if Loyola Plans failed to comply with the show cause order by Monday, he would assign a conservator to liquidate the assets of the company and find ways on how to rehabilitate it.
“We will also issue a cease and desist order to stop them from doing business,” Dooc told The Standard.
IC said the company should submit its plan on how it would cover its trust deficiency of around P238 million.
“We have to give Loyola Plans a chance to respond. Other companies have gone through these procedures as well. We audit them and we write to them when there are deficiencies,” IC media relations officer Joann Castro said.
Castro said most of the time, pre-need companies involved in trust fund deficiency issues could comply. She said in the case of Loyola Plans, a number of claimants came forward to complain that they were not able to get their claims.
Castro said Loyola Plans was expected to come up with a proposal by Monday on how it could cover up its deficiency.
“[The next steps] would really depend on the action of Loyola Plans,” Castro said.
Prior to the show-cause, IC sent a letter to Loyola Plans to explain how the company intended to fund its deficiency. Loyola Plans submitted an explanation, but IC was “not satisfied” with the response, according to Castro.
IC did not renew Loyola Plans’ license to operate this year. Loyola Plans could not be reached for comment.