2015-09-24

Significant number of ‘lost’ policyholders and beneficiaries traced

22 SEPTEMBER 2015
"Life insurers have reunited 431 364 policyholders and beneficiaries with their unclaimed benefits since the implementation in June 2013 of the ASISA Standard on Unclaimed Assets"
Life insurers have reunited 431 364 policyholders and beneficiaries with their unclaimed benefits since the implementation in June 2013 of the ASISA Standard on Unclaimed Assets.
The Association for Savings and Investment South Africa (ASISA) this week released updated statistics on the tracing activities of its long-term insurance members to the end of June 2015 aimed at locating policyholders and beneficiaries who have unclaimed assets due to them.
Peter Dempsey, deputy CEO of ASISA, says in total some 757 791 policyholders and beneficiaries must still be traced.
“The good news is that just over one third of ‘lost’ policyholders and beneficiaries have already been traced and paid their benefits,” says Dempsey.
He explains, however, that the total number of policyholders to be traced will always be a moving target. “There will always be policyholders who do not update their contact details and beneficiary details. Our Standard on Unclaimed Assets requires life insurers to start the process of tracing policyholders or beneficiaries within six months of the assets becoming payable.”

Policyholders/beneficiaries traced
Policyholders/beneficiaries not yet located
Within 6 months of benefit becoming payable
159 183
119 595
Within 3 years of benefit bec Policyholders/beneficiaries traced Policyholders/beneficiaries not yet located Within 6 months of benefit becoming payable 159 183 119 595 Within 3 years of benefit becoming payable 165 004 331 084 Within 10 years of benefit becoming payable 107 177 307 112 TOTAL (as at 30 June 2015) 431 364 757 791oming payable
165 004
331 084
Within 10 years of benefit becoming payable
107 177
307 112
TOTAL (as at 30 June 2015)
431 364
757 791

Dempsey notes that currently the majority of policyholders and beneficiaries not yet traced fall into the three-year category. The same is true for the number of policyholders and beneficiaries already traced.
“This indicates that the tracing efforts of life insurers are paying off. With time, however, we expect the majority of tracing efforts to reflect in the six months category.”
The Standard on Unclaimed Assets requires that life insurers with ASISA membership intensify the level of tracing policyholders or beneficiaries in order to minimise the pool of assets that remains unclaimed.
Dempsey says the reports received from member companies show at least four different tracing initiatives per case, including the use of tracing agencies, private investigators, the Department of Home Affairs and credit bureaus.
He adds that members continue to apply a number of innovative tracing methods, including the use of social media, especially Facebook and LinkedIn, and approaching professional membership bodies.
Dempsey says for some people traced the financial windfall came at a time of great need.
One life insurer traced an 81-year-old policyholder who had forgotten about his investment policy. The grateful policyholder told the insurer that the benefit could not have come at a better time since he required a back operation and did not have medical aid cover.
For an elderly couple the unexpected benefit payment meant that they could visit their children whom they had not seen in more than three years due to financial constraints. 
Another client, whose wife died two years earlier, did not know that there was a life cover benefit payable to him. He was left to pay medical bills and raise the couple’s teenage daughter and desperately needed the money.
Another insurer reported that the daughter of a deceased policyholder was able to open her own business after she was traced and paid the death benefit due to her.
Dempsey says the ASISA Standard on Unclaimed Assets exempts unclaimed assets from the Prescription Act, which provides for a three-year period within which a debt must be collected. This means that life insurers who are ASISA members are committed to holding and growing unclaimed policy benefits until the rightful owner is found, no matter how long it takes.
He says while the current Standard only applies to unclaimed long-term insurance benefits, this will change in January next year when the Standard becomes effective for Collective Investment Scheme (CIS) assets as well. ASISA is engaging with the Financial Services Board (FSB) on extending the principles contained in the Standard to cover unclaimed pension fund benefits.

http://asisa.org.za/en/media-release/303-significant-number-of-lost-policyholders-and-beneficiaries-traced

Billions in insurance benefits unclaimed

Life insurance companies have, over the past two years, managed to find 431 364 policyholders and beneficiaries due payouts from life policies and investments, according to the Association for Savings and Investment South Africa (Asisa).

Asisa this week released statistics on the tracing activities of its long-term insurance members – which collectively manage more than R2 trillion in assets – to the end of June 2015.
Clear guidelines
This follows the implementation in June 2013 of the Asisa Standard on Unclaimed Assets, which provides clear guidelines aimed at improving the industry’s efforts to locate policyholders and beneficiaries who have unclaimed assets due to them.
“Just over one third of ‘lost’ policyholders and beneficiaries have already been traced and paid their benefits,” said Peter Dempsey, deputy CEO of Asisa. About 757 791 policyholders and beneficiaries must still be traced, said Dempsey.
The Standard requires that members of Asisa intensify their tracing efforts, which should begin within six months of assets becoming payable, in order to minimise unclaimed assets. Member companies reported the use of at least four different tracing initiatives per case, according to Dempsey, including the use of tracing agencies, private investigators, the Department of Home Affairs and credit bureaus. In some cases, Facebook and LinkedIn were used.
“For some people traced the financial windfall came at a time of great need,” Dempsey noted. One life insurer traced an 81-year-old policyholder who required a back operation, but did not have medical aid cover.
“Another client, whose wife died two years earlier, did not know that there was a life cover benefit payable to him. He was left to pay medical bills and raise the couple’s teenage daughter and desperately needed the money,” said Dempsey.
In terms of the Standard, life insurers that are members of Asisa commit to holding and growing unclaimed policy benefits until the rightful owner is found, no matter how long that takes. This money must be invested in line with the expectation created by the original risk or investment policy.
Unclaimed assets are exempt from the Prescription Act, which provides for a three-year period within which a right must be enforced. As of January 2016, the Standard will apply to Collective Investment Scheme (CIS) assets too.
http://citizen.co.za/784726/billions-in-insurance-benefits-unclaimed/

2015-09-23

Life insurers pay 430,000 unclaimed benefits in two years

JOHANNESBURG – Life insurance companies have, over the past two years, managed to find 431 364 policyholders and beneficiaries due pay-outs from life policies and investments, according to the Association for Savings and Investment South Africa (Asisa).
Asisa on Tuesday released statistics on the tracing activities of its long-term insurance members – which collectively manage more than R2 trillion in assets – to the end of June 2015.
This follows the implementation in June 2013 of the Asisa Standard on Unclaimed Assets, which provides clear guidelines aimed at improving the industry’s efforts to locate policyholders and beneficiaries who have unclaimed assets due to them.
“Just over one third of ‘lost’ policyholders and beneficiaries have already been traced and paid their benefits,” commented Peter Dempsey, deputy CEO of Asisa.
Some 757 791 policyholders and beneficiaries must still be traced, said Dempsey.
“There will always be policyholders who do not update their contact details and beneficiary details,” he said. 
The Standard requires that members of Asisa intensify their tracing efforts, which should begin within six months of assets becoming payable, in order to minimise unclaimed assets.
Member companies reported the use of at least four different tracing initiatives per case, according to Dempsey, including the use of tracing agencies, private investigators, the Department of Home Affairs and credit bureaus.
In some cases, Facebook and LinkedIn were used to trace beneficiaries.
“For some people traced the financial windfall came at a time of great need,” Dempsey noted.
For example, one life insurer traced an 81-year-old policyholder who had forgotten about his investment policy and required a back operation, but did not have medical aid cover.
“Another client, whose wife died two years earlier, did not know that there was a life cover benefit payable to him. He was left to pay medical bills and raise the couple’s teenage daughter and desperately needed the money,” said Dempsey.
In terms of the Standard, life insurers that are members of Asisa commit to holding and growing unclaimed policy benefits until the rightful owner is found, no matter how long that takes. This money must be invested in line with the expectation created by the original risk or investment policy contract and cannot simply be shoved into a cash holding, for example.
Unclaimed assets are exempt from the Prescription Act, which provides for a three-year period within which a debt must be collected.
As of January 2016, the Standard will apply to Collective Investment Scheme (CIS) assets too.
Asisa is engaging with the Financial Services Board (FSB) on extending the principles contained in the Standard to cover unclaimed pension fund benefits, Dempsey said.
According to the latest annual report of the Registrar of Pension Funds, the total value of unclaimed retirement benefits rose to around R20 billion owed to roughly 3.5 million beneficiaries in 2014.
The roughly 50 active and registered unclaimed benefit funds, have an estimated R4.6 billion owed to around 792 000 beneficiaries, according to the deputy registrar of pension funds at the FSB, Rosemary Hunter.
http://www.moneyweb.co.za/news/industry/life-insurers-pay-430-000-unclaimed-benefits-in-two-years/

When employers become debt collectors …

Think twice about giving your employer the right to deduct money from your salary for the repayment of debt – in other words, giving your employer permission to pay one of your creditors before paying you your salary. I’m not talking about an emoluments attachment order (EAO), which is a court order compelling your employer to deduct from your salary money you owe a creditor who has obtained default judgment against you. I’m talking about you choosing to have your salary docked – by your payroll department – to pay a creditor. It seems a crazy thing to do, but apparently it’s not uncommon, particularly among state employees.
“Approximately 30 percent of First National Bank’s affordable housing book comes from payroll deductions,” Lee Mhlongo, the chief executive of housing finance at FNB, writes in a blog post on the bank’s website.
“Arranging a payroll deduction simplifies one’s life, as you do not have to agonise about the debit order coming off the account. Instalments are paid directly by the employer to the service provider (the bank) on behalf of the employee. The employer then pays the balance of the salary to the employee/client’s account.”
Making use of a payroll deduction to service a home loan has benefits, Mhlongo says, including a better risk profile with the bank, owing to there being less chance of default.
That may be so, but getting your payroll department to stop a monthly deduction from your salary can be a nightmare.
confused hr department
A Gauteng consumer who was paying her Standard Bank bond instalment via a payroll deduction became over-indebted and went into debt review. As soon as she was under debt review, she instructed her employer, the Gauteng treasury, to stop paying Standard Bank. (When you go into debt counselling, your debt counsellor will stop payments to all credit providers in order for them to be paid via the debt review process.) But the instruction was not followed, and the consumer’s employer continued to pay her home loan instalments to Standard Bank. When the consumer challenged this, her employer asked her to obtain a letter from Standard Bank issuing the instruction to cancel payment. But since the instruction to pay the creditor via payroll deduction did not originate with Standard Bank, it refused to issue a letter.
And it happened again. When the consumer’s debt counsellor warned the employer that its failure to carry out the employee’s instruction was placing her in danger of defaulting on her debt review, the employer asked for proof that the consumer was under “debt administration” – something quite different to debt counselling.
The debt counsellor pushed back, asking that since the deduction from the payroll was not court ordered, nor instigated by Standard Bank, but by the employee herself, what gave Persal (the government’s personnel salary system) the right to refuse to take the written instruction of the employee? “Be that as it may, please find attached documentation which confirms that the consumer has applied for debt review,” the debt counsellor said.
The employer’s response is telling: “The staff in human resources are just trying to ensure that they are covered should there be any repercussions from any financial institution.”
As the debt counsellor says, the employer’s over-zealous endeavour to protect itself put the employee at risk.
It took the consumer and the debt counsellor three months to get the employer to stop paying Standard Bank.
“It raises the question of whose interests are being served: the consumer’s or the credit provider’s?” consumer acitivist Simon Lapping says.
HUGE DEDUCTION
A Port Shepstone traffic officer, who had an existing loan from a microlender, obtained a R5 000 payday loan from the same lender. She was repaying her loans via payroll deduction. When she went under debt review, the microlender managed to get her employer to deduct R9 000 of her salary in one fell swoop – almost half of her gross income.
“It’s equivalent to the government doing debt collecting against its own employees,” Lapping says.
What these consumers have experienced also reveals ignorance on the part of payroll staff. Clearly, they don’t understand how debt review works.
There’s a lot of misinformation being disseminated about debt counselling, and some of the biggest offenders are microlenders.
The following is published on microlender Boodle’s website as an answer to the question “What is debt review?”:
“We are a responsible lender and will also not even consider giving you Boodle if you are already debt stressed. We also take fraud very serious [sic] and if you abuse our goodwill and apply for administration and debt review after we have given you Boodle we will be very disappointed and may even open a case of fraud with the South African Police Services. If you are in fact debt stressed we suggest you seek counselling and approach a debt counsellor to assist you.”
I get that Boodle is trying to dissuade “debt-stressed” consumers from acquiring credit with the intention of then going under debt review. But consumers who are debt-stressed wouldn’t be able to get credit if credit providers did proper affordability assessments, which they are legally obliged to do. Their failure to properly assess affordability is what the National Credit Act defines as “reckless lending” and there’s no excuse for it.
Lapping says Boodle is also seeking to discourage consumers from applying for debt review – by threatening them that they will be sued for fraud. He has lodged a complaint with the National Credit Regulator (NCR).
Early this year, the NCR referred to the National Consumer Tribunal a case of reckless lending against Boodle. Lesiba Mashapa, the company secretary at the NCR, says the case was settled, with Boodle agreeing to pay an administrative fine of R500 000 and write off the loans.

http://www.iol.co.za/business/personal-finance/columnists/when-employers-become-debt-collectors-1.1921283#.VhOaRC4rJhE

2015-09-14

Debt Collection Plays An Important Role in the Economy

The trade association I represent, DBA International and its 575 member companies, play a critical role in keeping America’s economy moving forward. We purchase and collect defaulted receivables. It’s important to note that only a small fraction of consumers wind up defaulting on debt and an even smaller percentage wind up in court. While efforts to collect this defaulted debt may be an unpleasant topic of conversation, attempts to do so are nevertheless important to all of us.
America’s economy has been chugging along and the recent improvement in the unemployment rate is certainly welcome news. When America’s economy works efficiently, consumers are able to access and use credit to purchase goods and services. America has a credit-based economy and, when used responsibly, it works well for families, farmers and small businesses. Whether it’s a family taking out a loan to buy a home, a farmer borrowing money to purchase equipment, or a small business using a credit card to acquire a new printer, access to affordable credit is what makes America’s economic engine hum.
It is also important that consumers, farmers and small businesses repay their debts. The system falters when consumers default on loans. We all suffer when those who use credit fail to live up to their obligations. When this occurs, the costs to borrow increase and prices rise because businesses that provided goods and services have to recoup money lost due to default. Access to credit is then greatly reduced.
As typically occurs, actions by unscrupulous debt collectors make headlines – unfortunately there are “bad apples” in every profession. Reacting to these stories, legislators often look for a “quick fix” and reporters attempt to target the entire debt collection industry and paint it with broad, unflattering brush-strokes.
One recent example of a “quick fix” in the California State Legislature is the Economic Equity and Financial Stability Initiative, a three-bill package introduced by a former bankruptcy attorney, purporting to reform California’s bankruptcy and debt collection laws to help low-income families get back on their feet. These bills would have unintended and negative consequences for California consumers.
While SB 641 claims to provide low-income consumers with legal recourse to set aside a default judgment, what it effectively does is require companies who successfully obtained a judgment in court to reproduce evidence already provided for up to six years from the date of judgment—well beyond any legal requirements for document retention. The issue the bill attempts to address is ensuring the debtor receives proper notification of a lawsuit filed against them—which represents only one percent of all complaints received by the Consumer Financial Protection Bureau. The stated problem involves the process serving profession, yet the bill focuses only on judgments obtained by debt purchasers.
By raising the homestead exemption, SB 308 would allow wealthy donors to shield assets prior to filing for bankruptcy and then walk away with hundreds of thousands of dollars of unrestricted cash. Likewise, the wage garnishment restrictions outlined in SB 501 favor higher income debtors and may unduly penalize low-income wage-earners with assessment fees multiplied by the extension of repayment terms. The imbalance these bills create will be detrimental to the vast majority of consumers who are fiscally responsible.
Equally true, various columnists and reporters writing for publications in California and nationwide frequently paint inaccurate, misleading pictures of the debt collection industry. Efforts to scapegoat an entire industry by focusing on the unfortunate actions of one entity usually ring hollow. It is often forgotten or conveniently ignored that the debt buying industry is already heavily regulated by multiple government entities at the federal and state level – with more regulations being proposed all the time. Equally true, DBA International member companies have instituted an industry-leading Receivables Management Certification Program that exceeds state and federal regulation.
The responsible use of credit is an integral part of a fully functioning economic system. While the collection of debt is an unpleasant subject, it is nevertheless critical in a credit-based economy. On behalf of DBA International’s member companies – who collect debt professionally and ethically, comply with a bevy of federal and state regulations and interact with consumers in a transparent manner – we understand the desire for the legislative “quick fix” and the desire by some to create “bad guys.” Hopefully cooler heads will prevail. Decision-makers will realize that such “easy solutions” usually have unintended consequences and efforts to demonize an entire industry don’t pass the sniff test.
Jan Stieger is the executive director of Sacramento-based DBA International.

2015-09-06

South Africa: Govt Acts On Garnishee 'Abuse' in Public Sector

The government has appointed a company to investigate the abuse of emolument attachment orders, also known as garnishee orders, in the public services sector.
Q Link Holdings was appointed on Tuesday to "investigate the extent and abuse of EAOs in the public service".
Public servants are some of the most heavily indebted in South Africa, accounting for about 40 percent or more of unsecured debt.
Q Link executive chairperson Clark Gardner told Fin24 that the company will manage all existing garnishee orders and will receive all new ones.
The company will capture the orders and access the Government payroll to 'execute' on the deduction and the payment to collectors, Gardner said.
"Irregularities and past over-deductions will be challenged in the appropriate court to rescind on a case by case or class action basis and criminally prosecuted if appropriate," he said.

In July Judge Siraj Desai ruled that garnishee orders against 15 consumers were "unconstitutional" and "an assault on human dignity" in a landmark case.
The class action was brought by the Stellenbosch's Legal Aid Clinic against a group of credit providers and Flemix & Associates, a law firm that facilitates the salary deductions.
In December 2013 cabinet authorised the ministers of finance and trade and industry to take measures to assist the over-indebted.
This led to a call by Finance Minister Nhlanhla Nene for tenders to find a service provider to undertake an investigation into the extent and abuse of garnishee orders in the public sector.
Source: Fin24
South Africa
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2015-09-02

What happens to unclaimed benefits in SA?


Use technology to ease the administrative burden to insurers, says Walter van der Merwe, CEO of FedGroup Life.
Issued by: Headlines
[Johannesburg, 2 September 2015]
An unclaimed benefit is any benefit not paid by a fund to a member, former member, or beneficiary within 24 months of the date on which it became legally due and payable.
According to figures released by Statistics SA in February 2015, the average job tenure in 2014 in South Africa was 47 months, up from an average of 36 months in 2008. While this is considerably longer than the average for millennials – those born between 1977 and 1997 – in the US, 91% of whom are expected to stay in a job for less than three years, according to the Future Workplace "Multiple Generations @ Work" survey, it still means employees move around a great deal throughout their careers.
This poses an enormous challenge to insurers in terms of paying unclaimed benefits. Maintaining an accurate database that reflects updated member and beneficiary information can become an onerous affair, in light of the Stats SA's findings, says Walter van der Merwe, CEO of FedGroup Life.
In addition, many people also tend to go where the work is, which means they not only move jobs but also change residential addresses regularly. Due to the size of South Africa's migrant workforce, the administrative burden in keeping these records up to date can be onerous.
The enactment of the Protection of Personal Information (POPI) Act, No 4 of 2013, which promotes the protection of personal information by public and private bodies, has also made the process of confirming and updating personal information, and tracking members or beneficiaries, more complicated. While the spirit and intent of the Act is positive, it doesn't make provision for those trying to access personal information for noble reasons, as is the case with tracking and paying unclaimed benefits.
Thankfully, technology has made a significant difference in the industry's ability to track and find people, and has also helped to reduce the costs associated with this process, sometimes to as low as R5 per individual.
The ability to update and manage information through proactive and regular communication is where technology has had the biggest impact in this regard. Regular SMS notifications and annual or quarterly e-mails mean active fund members are able to confirm or update their information with the click of a button.
With up-to-date records, insurers are more likely to track down and pay benefits to the correct people without much effort, and cost. However, when these details are not up to date, insurers will often use a variety of processes and procedures to track members or beneficiaries.
One such approach is a tiered process, where the lowest cost method is used first to try to trace people, as the cost thereof is offset against the benefit. In general, a third of people are found with this approach. If not, the second and third tiers are used, which get progressively more involved and expensive as there is physical investigation and tracing that happens, which is resource- and time-intensive. If these attempts are unsuccessful then the cycle is repeated.
However, this is not the industry standard. In fact, there is an incentive for insurers to drag out the process as it means assets remain invested and earn income, and the primary function of active pension and provident funds is not to trace members.
However, legislation within the Pension Funds Act ensures funds cannot remain in an active provident fund indefinitely, as unclaimed benefits have to be transferred into an unclaimed beneficiary fund, the sole job of which is to trace and find members and beneficiaries.
The benefit of unclaimed benefit funds is that these funds have a single purpose; to find the members or beneficiaries and pay out the benefit. While there are costs involved, the benefits outweigh the costs. These funds are also governed by their own set of rules, which are registered with the Financial Services Board and approved by South Africa Revenue Service. These funds provide a vehicle to safeguard benefits, and actively trace members or beneficiaries in the most effective and efficient manner possible, ensuring the funds get to those for whom it was intended.

http://pressoffice.mg.co.za/fedgroupfinancialservices/PressRelease.php?StoryID=261013