Another one (insurance company) bites the dust.

One after another they fall in scandalous circumstances leaving in their wake hapless policy holders who can’t get back even half of what they invested in these companies.

 And because they declared bankruptcy, those responsible officials of the failed company went away unnoticed, with the stash of the loot they enjoy.

LBC has always enjoyed a strong financial stability and an image of being a reliable company. But its entry into pre-need industry (as collector) might be ill-advised, no wonder the venture ended up in disaster because obviously there is no law or agency to supervise or regulate this type of business (insurance collection). Now, TPG has someone to blame for its own bankruptcy.

Mmaybe, the government should put in place laws that will ensure that before any companies can venture into pre-need business, they must have adequate funds and their must be a more aggresive Insurance Commission to ensure that the pre-need companies are always above board in their operation and prevent for manipulation of their funds.

pdic-logo.jpgAnd then, laws regarding bankruptcy of companies in insurance business may have to be updated to make sure that any bankruptcy declaration should be investigated well. And if such bankruptcy is NOT arising from loss due to financial market failure (recession, inflation, stock market crash, forex loss, etc.) but due to mismanagement of funds by the company officials, then such company/official should not be given any bankruptcy protection. 

This phenomenon of pre-need companies ending in financial distress surely makes every Filipinos wary of investing in the industry. What happened to CAP is really  sad story for members and this new episode involving LBC and TPG raises doubt on the ability of the industry to protect the folks that gave their trust and money on them.

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By Daxim Lucas
Philippine Daily Inquirer
 
Posted date: January 27, 2008
 

MANILA, Philippines–PROSECUTORS HAVE recommended the filing of estafa charges against officials of LBC Development Corp. for allegedly failing to remit to a pre-need firm premium payments made through it by expatriate Filipinos.
lbc_insurance.jpgIn a resolution penned earlier this month, Mandaluyong Assistant City Prosecutor Laurence Mark A. Encinas said there is sufficient ground to file estafa charges against LBC directors and officers Juan Carlos G. Araneta, Carlos R. Araneta, Javier C. Mantecon, Joseph Jeffrey B. Rodriguez, Marilyn R. Aben, Ma. Theresa F. Rañeses, Ma. Eliza G. Berenger and Marilou R. Olan.

According to the complaint, LBC failed to remit a total of P68.1 million in pre-need premium collections to The Professional Group (TPG) — a financially-troubled firm — under a deal that was reached in 1999.

Under the scheme, LBC’s overseas branches would act as collection agents for OFW clients, especially US-based Filipinos, who wanted to pay for their pre-need accounts.

“Respondents do not dispute that LBC failed to remit the collections it made from the planholders to TPG,” the prosecutor said. “It is likewise clear … that said collections for TPG have been offset with [another] loan due LBC Bank and were applied for the payment of legal fees of LBC.”

Encinas said that LBC director Berenguer ordered the unauthorized and illicit offsetting of the payment collections with that of another loan that was falling due.

Last year, TPG president Yolanda D. Miranda filed the complaint saying that LBC owed her firm “unremitted collections … for TPG’s pre-need products.”

She alleged that Olan, LBC Express Inc. president, admitted that the company could not afford to pay the outstanding amount it owed TPG “due to cash flow constraints.”

Miranda alleged that LBC had been remiss in remitting collections to TPG from its foreign clients as early as 2002.
 

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