Pre-need crisis 'bottoming out'

By Ronilo L. Pamonag

The country's pre-need industry is poised to rebound as the crisis plaguing it is ‘bottoming out.'

Speaking before reporters Friday last week, Cesar Mechelina, complaints desk officer of the Philippine Federation of Pre-need Companies, said that he expects the industry to recover ‘in due time.'

The industry will rebound to its previous level by this year, and the growth period will be next year, he predicted.

Mechelina observed that the market has realized that the crisis is a ‘specific problem to a specific product of specific companies.'

Already, two pre-need companies offering educational plans have had encountered problems paying their obligations. These are the College Assurance Plan and the Pacific Plans Inc.

Earlier, Rex Mendoza of Philam Asset Management, Inc. said that he expects more pre-need companies to go the way of CAP and PPI. Although he refused naming these companies he predicted to encounter difficulties paying their planholders, Mendoza hinted that these are those that offer open-ended plans.

In spite of the problems though, Mechelina assured the public that the industry is ‘stable in general.'

“We will continue to provide (for our planholders),” he stressed.

The long term effect of the crisis, he remarked, is that “it will separate the boys from the men; those that have inherent stability from those without the inherent stability.”

“The industry is undergoing a cleaning process.”

Memorial plans sales up

In a related development, Mechelina observed a substantial increase in the sales of memorial plans despite the marked decrease in the sales of educational and pension plans.

Although memorial plans is also pre-need, the public does not associate it with educational or pension plans, which also come under the pre-need category, he observed.

“The crisis in confidence is centered on education and pension plans,” he stressed.

Also, probably because of the problems with the two, sales people have shifted to selling memorial plans, Mechelina further explained.