ASISA, the
Association for Savings and Investments SA, officially charged South African
life assurance companies to track down the thousands of people they owe
billions of Rands in unpaid benefits.
A
fixed procedure will be followed to trace unaware claimants so as to pay
insurance funds sitting in “suspense funds” to their rightful beneficiaries.
The integrity of this standard will be rolled out to include the unit trust
industry, and possibly the retirement fund industry, where total value of
unclaimed benefits could be greater than that of the life industry.
The reasons for the enormous
balance in unpaid benefits?
- Policyholders’ failure to advise assurance companies of change of contact
details.
- Leaving the country to live and work abroad without formally emigrating.
- Deceased policyholders with no nominated beneficiaries or incomplete contact
details.
- Forgotten policies, taken out long ago, and lost policy documents are common
reasons.
Life companies must hold and grow policy benefits until the rightful owner is
traced; no matter how long it takes. It’s
important to know that prescription will
never apply, even to a claim made 100 years from now. If provable and
legitimate it will be paid out. Claimants never lose their right to claim, no
matter what.
The bottom line? Assurance companies
are obliged to invest and manage “suspense policy fund” with the objective to
deliver returns with reasonable customer expectations across a range of stock
market conditions.
In
other words, policyholders’ market-linked return and choice, at inception,
remains at maturity for payout of underlying investment portfolio until the
benefit is paid. It’s called Treating
Customers fairly.
