Minimum Requirements for the Approval of Pre-Need Products

March 8, 2016 INSURANCE CIRCULAR LETTER NO. 010-16 Supersedes: None TO : All Pre-Need Companies Doing Business in the Philippines SUBJECT : Minimum Requirements for the Approval of Pre-Need Products In order to simplify the submission of pre-need products for approval, the following minimum requirements are hereby prescribed to implement Section 15 and Section 17 of Republic Act No. 9829 otherwise known as the Pre-Need Code of the Philippines, pursuant to the powers vested in the Insurance Commission by the provisions of Section 6 thereof: 1. All submissions of pre-need products for approval shall be accompanied by the duly accomplished Checklist of Minimum Requirements for the Approval of Pre-Need Plans (Annex A). 2. The submission shall also be accompanied by all documents as enumerated in Annex A. The format to be used for the Actuary's Certification (Item C.14 of the Checklist of Minimum Requirements) is attached as Annex B. 3. All pre-need plan contracts, application forms, certificates, sales materials and other related forms shall strictly comply with the substantive requirements of the Pre-Need Code, its Implementing Rules and Regulations and pertinent Circulars and Guidelines issued by the Insurance Commission. This Circular takes effect immediately. ETHIDa For strict compliance. (SGD.) EMMANUEL F. DOOC Insurance Commissioner ANNEX A Checklist of Minimum Requirements for the Approval of Pre-Need Plans Name of Company: _______________________ Name of Plan: _______________________ Yes No Remarks A. Eligibility Requirements 1 No trust fund deficiency [ ] [ ] _____________ 2 No paid-up capital impairment [ ] [ ] _____________ 3 No unpaid fines and penalties imposed [ ] [ ] _____________ by the Commission for violations of the New Pre-Need Rules on the Registration and Sale of Pre-Need Plans 4 Not under corporate conservatorship, [ ] [ ] _____________ rehabilitation and liquidation B. Corporate Information 1 Duly Accomplished Registration [ ] [ ] _____________ Statements signed by the Chief Executive Officer or Chief Operating Officer or Chief Finance Officer or a Corporate Officer performing similar functions 2 Board resolution authorizing the [ ] [ ] _____________ registration of applicant's pre-need plan certified by the Corporate Secretary 3 Opinion of independent counsel on [ ] [ ] _____________ the legality of the Registration Statements C. Pre-Need Plan Documents 1 Pre-Need Plan Contract/Agreement [ ] [ ] _____________ (3 copies) 2 Plan Specifications Page (3 copies) [ ] [ ] _____________ 3 Pre-Need Plan Application Form [ ] [ ] _____________ (3 copies) 4 Certificate of Full Payment (3 copies) [ ] [ ] _____________ 5 Actuarial Notes [ ] [ ] _____________ a. Brief and concise description [ ] [ ] _____________ of Pre-Need plan b. Actuarial formulations and [ ] [ ] _____________ assumptions used in the viability study and other actuarial values 6 Viability Study (interest rates, [ ] [ ] _____________ discount rates, lapses, termination, utilization rates, expenses, etc.) for the complete duration of the plan or 20 years, whichever is shorter 7 Table of Plan Contract Price and Instalment [ ] [ ] _____________ amount including how the Gross Contract Price was generated 8 Schedule of Trust Fund Deposit Rates [ ] [ ] _____________ for all payment terms, including but not limited to spot cash with or without down payment 9 Schedule of Pre-Need Plan Reserves [ ] [ ] _____________ including the Contribution to Reserves 10 Schedule of Insurance Premium Reserves [ ] [ ] _____________ (IPR) including the contribution to IPR 11 Schedule of Supplemental Reserves (SR) [ ] [ ] _____________ including the contribution to SR 12 Schedule of Termination Values [ ] [ ] _____________ 13 Schedule of Illustrative Dividends, if [ ] [ ] _____________ applicable 14 Sworn certification of IC accredited [ ] [ ] _____________ actuary following prescribed IC format (see Annex B) 15 Latest Audited Financial Statements [ ] [ ] _____________ 16 Advertising Materials [ ] [ ] _____________ 17 Supporting documents: [ ] [ ] _____________ a. Latest articles of incorporation and [ ] [ ] _____________ by-laws b. Trust agreement with the Trustee [ ] [ ] _____________ c. Information Brochure and other printed [ ] [ ] _____________ literature to be distributed to the public d. Copies of related contracts such as [ ] [ ] _____________ mortuary contracts, school contracts or other service provider's contracts e. List of Affiliated Mortuaries for [ ] [ ] _____________ Memorial Plans f. list of accredited schools for traditional [ ] [ ] _____________ education plans including current costs of promised benefits (if applicable) g. Copies of agency contracts with general [ ] [ ] _____________ agents and sales counsellors h. Description of training program for [ ] [ ] _____________ agents and sales counsellors i. Curriculum vitae of officers and directors; [ ] [ ] _____________ j. Photographs of the signatories to the [ ] [ ] _____________ registration statement taken not more than 30 days prior to the filing of registration statements k. NBI clearance of the directors and [ ] [ ] _____________ principal officers of the issuer or current passport; l. Specimen copies of group master policy and insurance riders issued to the Pre-Need Company for the following coverage: i. Group Credit Life [ ] [ ] _____________ ii. Group Yearly Renewable Term [ ] [ ] _____________ iii. Supplementary Insurance Benefits [ ] [ ] _____________ iv. Insurance Certificates/Proof of [ ] [ ] _____________ Insurance Coverage D. Payment of Filing Fee [ ] [ ] _____________ 1 A Filing Fee for registration of New/ Additional plans equal to 0.10% of the aggregate contract price (exclusive of VAT) plus 1% of the Filing Fee for the Legal Research Fund shall be paid upon submission of the plan. 2. For other applicable fees, please refer to Circular Letter No. 2014-15 item D under V. Products/Forms Approval. Note: For item(s) not applicable please indicate "N.A." together with a brief explanation ANNEX B Letterhead Date __________ Insurance Commissioner INSURANCE COMMISSION 1071 United Nations Avenue Ermita, Manila CERTIFICATION Sir/Madam: I, _______________________ (Name of Actuary) , do hereby certify that: 1. The actuarial formulations used for ________________________ (Name of Plan) are accurate and in accordance with generally accepted actuarial principles and are in compliance with regulatory requirements. 2. The actuarial assumptions used in the viability study and in the derivation of the Gross Contract Prices, Installments Amounts, Reserve Liabilities and Termination Values are in my opinion, reasonable and appropriate based on company's experience and existing conditions and the company's reasonable expectations of future outcome throughout the duration of the plan. TIADCc 3. The schedule and rates of contribution to the trust fund in the viability study are sufficient to pay all benefits and guarantees described in the plan. 4. The provisions of the pre-need plan contract have been reviewed and all its benefits and guarantees have been quantified and considered in the pricing and determination of the trust fund contributions, pre-need reserves and termination values. 5. In my opinion, all insurance benefits included in the pre-need plan contract are covered under appropriate insurance contracts, approved by the Insurance Commission (IC) and issued by a duly licensed insurance provider(s). 6. I have followed the Pre-Need Code, its Implementing Rules and Regulations, and pertinent IC circulars, and guidelines and standards of the Actuarial Society of the Philippines (ASP), and I have adhered to generally accepted actuarial principles and practices where no guidelines or standards from the ASP are applicable. 7. I acknowledge my personal liability as a consequence of this Certification, warranting disaccreditation by the Insurance Commission or any other appropriate action that may be taken, before the proper forum. ____________________________________________________ Signature over Printed Name of the Actuary/Consulting Actuary IC Accreditation No. ______________________ Issued at: ___________ on ____________ PTR No.: ________________________ Issued at: ___________ on __________ Letterhead REPUBLIC OF THE PHILIPPINES City of ______________________ (S.S.) Subscribed and sworn to me before this ____ day of ___________, at ________________. Affiant exhibited to me his/her and ______________________ (government issued identification card) issued on _____________ at ____________. NOTARY PUBLIC Doc. No. _______ Page No. _______ Book No. _______