Pag-IBIG bids out housing life insurance coverage

MANILA, Philippines - The Pag-IBIG Fund recently conducted a competitive public bidding to select the most qualified and competent life insurance provider for the fund’s housing loan accounts.

Pag-IBIG members who avail of a loan through any of the fund’s home lending programs are required to be covered by a mortgage redemption insurance (MRI)/sales redemption insurance (SRI) to protect the fund’s financial exposure, as well as to provide financial support for the member-borrower’s legal heirs in case of death.

Prior to the bidding, Pag-IBIG Fund’s housing life insurance portfolio was exclusively managed by a yearly renewable term (YRT) insurance pool, which was engaged by the fund in 1985 through a memorandum of agreement (MOA) without undergoing public bidding.

The pool of insurance companies was represented by an executive committee that, even without juridical personality, was given by the pool the exclusive authority to approve or deny claims submitted by Pag-IBIG member-borrowers. The agreement was practically unchanged for three decades.

“The avowed purpose of public bidding is to secure for the public the best possible advantages to be gained from open competition. As a government-owned and controlled corporation, Pag-IBIG has the duty to ensure that its members, and, in particular, its housing loan borrowers, get the best possible insurance coverage and servicing to protect them against insurable events,” said Darlene Marie B. Berberabe, president and chief executive officer of Pag-IBIG Fund.

Pag-IBIG endeavored to strengthen their processes and systems, with special attention to procurement requirements. In line with President Aquino’s leadership on good governance, Pag-IBIG terminated the MOA with the pool in accordance with the exit provision therein and bid out the insurance coverage of the fund’s housing loans through a legitimate, fair, honest, and transparent selection process. This allowed Pag-IBIG to look for the best terms and conditions for the insurance coverage.

“We are grateful for the long partnership with the insurance pool which has serviced us for 30 years. The business is still open to insurance companies, but we principally hope to inject the public bidding as a matter of good governance,” added Berberabe.

Vice President Jejomar C. Binay, concurrent chairman of the Pag-IBIG Fund board of trustees and Housing and the Urban Development Coordinating Council (HUDCC), fully supports the competitive selection process as “doing right by our members”.