Know the Status and Conditions of your Company Group Insurance Benefits

It’s no secret that the South African economy is really struggling.  The impact of poor economic growth is being felt by all South Africans, and for some the impact is direct and more severe, with themselves, their partners or family members dealing with retrenchments and/or struggling to find a career in the shrinking job market as a result of company downsizing or liquidations.

As the head of a group risk insurance business, I sometimes see situations where claimants are unaware that they no longer qualify for their company insurance benefits as a result of their retrenchment or their companies’ non-payment of premiums or even the unforeseen liquidation of their company.

This matter is further exacerbated by the fact that insurance companies have experienced large increases in claims over the last couple of years, and as a result the cost of group risk insurance is increasing across the industry.  As a way to manage these costs, insurers are strictly adhering to policy conditions to ensure that only valid claims are paid, with limited leniency for non-compliant employers.

Members who only discover at claim stage that their company has not paid premiums, and therefore their claims are not valid, have not been afforded the opportunity to get their companies to take corrective action, or to seek alternative cover in the market.  This is exactly the type of scenario that the revised Policyholder Protection Rules (PPR’s) are trying to prevent.

The PPR’s require insurers to inform members of group schemes (in detail) of their existing benefits, and on an ongoing basis to keep members informed of all material changes to their benefits and/or terms and conditions.

Employers and funds can contract with their insurer to take on this responsibility, (although they must provide evidence to the insurer to demonstrate that it was done), or they can rely on the insurer to provide the required disclosures.  This will of course require insurers to collect member contact information in the form of mobile numbers and email addresses where these are available.

The direct communication from insurers will be particularly important in situations where members are not aware that their employers are non-compliant, that the schemes have terminated, or their company or fund has liquidated.  Members who are made aware of such changes in the status of their insurance schemes will be in a better position to make informed financial decisions.

Although somewhat impractical in its current form, the PPR’s have the right intentions of keeping members of group schemes informed of their benefits before, during and after entering into a group scheme policy.  The biggest challenge is the requirement that group risk insurers need to carry or have access to member contact information, however given that members will ultimately benefit, we will engage and work with our policyholders to do what we can to achieve this before the effective date of 1 January 2020.

Warm regards