All you need to know about unclaimed benefits

According to the Financial Sector Conduct Authority (FSCA), South Africa had R88,56 billion in unclaimed assets in 2022, with unclaimed life insurance benefits making up 38% of the total. As of 1 January 2023, Hollard Life Solutions’ unclaimed assets amounted to R10 million, a relatively modest figure compared with other insurers in South Africa.

The Association for Savings and Investment South Africa (ASISA) categorises assets as unclaimed, if, after a maximum of three years attempts to contact the main member or beneficiary have yielded no results.

Avinash Baboolal, Senior Claims Manager at Hollard Life Solutions says, “Despite industry-wide initiatives to trace the beneficiaries and owners of unclaimed benefits, the quantum of unclaimed assets continues to rise annually.”

The primary cause of unclaimed benefits is usually outdated contact details, where policyholders may have unintentionally neglected to update their contact information as their lives undergo changes. The consequences are significant, policyholders miss out on their benefits, and beneficiaries are left unaware of their entitlements.

“When compared with the rest of the industry, Hollard Life Solutions’ unclaimed benefits of just over R10 million is a relatively small figure. However, these funds could make a significant difference to the lives of the beneficiaries, particularly in times of distress and hardship,” says Baboolal.
“At Hollard Life Solutions, our initial approach is to contact policyholders or beneficiaries using available system contact information. If that is unsuccessful, we employ third-party verification tools to source the most up-to-date information. In cases where contact remains elusive, we approve tracing agents to step in to collect the necessary information for a claim payout.

“Managing unclaimed benefits can be complex, particularly when the primary policyholder has passed away, and beneficiaries are unaware of their entitlements. Hence, it is important for policyholders to prioritise updating their personal details and beneficiary nominations annually, and to work collaboratively with their insurer to ensure effective record keeping.”

Baboolal urges customers to keep their contact details up to date with their insurers to avoid a scenario where no one can be traced to benefit from their contributions.

“We want to make sure that all valid claims are paid. In the case of unclaimed benefits, we follow a thorough evidence-based assessment criteria, given the timelapse on these claims. The process is fair and transparent, and it seeks to authenticate the identity of the claimants.

ASISA requires that when all reasonable attempts to trace the customer, heir, or beneficiary have been exhausted, and in the cases of life policies release assets from the reserve backing an unclaimed benefit, those unclaimed assets should not be paid to shareholders or treated as income but should be invested in socially responsible activities.

That investment should be in an appropriate vehicle within the context of South Africa’s social development needs – mainly in high social impact funds with commercial return, such as industry initiatives and/or Enterprise Supplier Development Funds. This does not, however, apply in the case of risk policies such as annuities, where the payment of the benefit ceases on the death of the policyholder or beneficiary.

While different insurers have varying protocols for retaining unclaimed benefits, Hollard Life Solutions preserves unclaimed benefits after the benefit has been deemed unclaimed. During this time, the assets are held in an interest-bearing account to safeguard the interests of potential beneficiaries in the event of a subsequent claim. Baboolal explains that unclaimed benefits do not become the property of Hollard Life Solutions. The right of policyholders to the unclaimed asset persists until the claim is settled, irrespective of the timeframe.

Clients who believe they may have unclaimed benefits are encouraged to contact their insurer or broker. This process may present added complexity for beneficiaries who are unaware of their nomination for benefits. In such cases, Hollard Life Insurance advises beneficiaries to contact insurance companies directly to ascertain whether their loved ones had policies with them. The process may be easier to facilitate if they are in possession of any of the policy documents.