Thursday, 24 July 2014

#Change: FG makes collection of insurance benefits for deceased relative easy.

This is a step taking in the right direction, especially that it is the general public driven.It's a change i believe will make life easier for many families who have lost their loved ones who properly was their breadwinner. Beyond the media statements, i hope they have really effected this.

Info from Punch:
The Federal Government has removed the requirement for the presentation of letters of administration by relatives of deceased workers before they can get the insurance benefits of their breadwinners.

Letters of administration are an official court order appointing someone as the administrator of a deceased person’s estate where no valid Will exists. An administrator derives his powers to act from the grant of the letters of administration, and where the letter is not granted, an administrator cannot act.

The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas, told our correspondent that the decision to remove the requirement for letters of administration as a precondition for the payment of group life insurance policy benefits was one of the amendments in the Pension Reform Act, 2014, which was signed into law on July 1 by President Goodluck Jonathan to replace the 2004 version.

According to him, the insurance benefits of deceased workers will no longer be transferred into their Retirement Savings Accounts with the Pension Fund Administrators, but will now be paid directly to the relatives of the workers by insurance companies.

The decision of the government will make more people to now demand and get the insurance benefits of their deceased relations. Before now, many relatives of deceased workers had abandoned the quest to get the insurance benefits of their loved ones who died in active service due to stringent rules guiding the issuance of letters of administration.

Insurance operators say the Group Life Insurance Policy, which originates from the PRA 2004, does not allow the beneficiaries to have easy access to deceased workers’ claims when the need arises.

Section 9 (3) of PRA 2004 states, “The employer shall maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee.”

The insurance claims will be transferred to the Retirement Savings Account of the deceased worker and can only be accessed by the beneficiaries if the worker made a Will before he died.

In the absence of a Will, the beneficiary must present the letters of administration, the process of which sometimes take years to get.

This impediment, insurers noted, had often discouraged relatives of deceased workers from demanding for the insurance claims when their breadwinner died.

Thomas said the presentation of letters of administration was not a requirement of the insurance companies, but that of the PFAs.

“The delays that arise in transferring the benefits from insurance firms to the PFAs when there are a group life insurance claims and demand for letters of administration have been removed. The provision of the insurance law regarding payment of claims is now being implemented, which means the main beneficiary will be paid directly and that reduces the delay that occurs in claims settlement,” he said.

Before the advent of the PRA 2014, he explained that claims used to be paid into the RSAs of the workers, with the PFAs enforcing the requirement for letters of administration.

The only ground on which an insurance company will now ask for the letters of administration, according to him, is if the deceased worker did not leave any beneficiary behind.

The director-general said the PRA 2014 had also elevated the status of insurance firms in the management of the Contributory Pension Scheme in terms of administration of retirement benefits by giving the National Insurance Commission a chance to have its representative on the board of the National Pension Commission.

Thomas said this would enhance shared regulation, synchronisation and alignment of policies between the two regulatory bodies.

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