Old Mutual claims it was always going to pay out pension of client

Insurer Old Mutual claims it was always going to pay out the pension of a particular client whose daughter took to social media to complain about the company’s inaction.

Old Mutual public affairs manager Celiwe Ross said there is, however, legislation that all insurance companies need to adhere to before a claim can be settled. These issues are currently causing a delay in the customer’s pension payout.

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The JSE-listed insurance company has been the subject of a fierce social media furore about the purported low payouts of claims and not honouring its clients’ retirement and funeral benefits.

The social media storm erupted after a tweet by Sebabatso Molefi, who posted about her unhappiness about Old Mutual’s non-payment of her mother’s pension.

The post read: “Dear @OldMutualSA please advise why you are refusing to release my mother’s money even though a court order has been provided. You are in contempt of court and I am about to lose my cool right now.”

Her post has been viewed and retweeted over a million times and led other disgruntled Old Mutual policyholders to share their experiences of low payouts and struggles accessing benefits related to funeral and insurance policies.

Two options

Old Mutual has since met with Molefi and the family’s legal representative, and two possible settlement options are currently on the table.

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Ross said Old Mutual has committed to pay out the claim.

“We have committed to pay out this claim. We presented them with two options of what the outcome could look like and each have pros and cons which they need to consider. They are taking advice on what the best option is for Mrs Molefi.”

Ross said media reports that Old Mutual agreed to pay out an amount of R3 million to the complainant are inaccurate.

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“We have never disclosed any amounts. We have been very conscious about protecting the privacy of this matter. We have been vague about the specifics because of the sensitive nature we are dealing with. What I am able to say is the claim involves a retirement fund, which is governed by the Pension Funds Act and Income Tax Act.

“The Pension Funds Act tells us how to execute against a retiral, what do we do with the funds, and how much a member is entitled to. The Income Tax Act talks about tax provisions, so there are processes that are outside of Old Mutual’s control – any insurer for that matter – that we have to adhere to, as we are a highly regulated industry.”

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Over and above that, there are certain legal processes between the parties involved, said Ross, which are governed by a different set of laws. “If it were just a pension fund where the member retires the enactment would have been very simple.”

Old Mutual unprepared for backlash

Ross admitted that Old Mutual should have handled the outcry on social media differently. Asked whether Old Mutual underestimated the backlash that followed, she acknowledged lessons were learnt.

“How do you plan for it? We were not perfect in this. A child of a customer had to turn to social media to raise her frustration. It is well acknowledged and we are looking at our value chain from a customer services perspective.”

Besides the outcry from unhappy customers, there have also been calls from social media users to summarily cancel Old Mutual insurance products and boycott the insurer. Some financial advisors have also taken to X (formerly Twitter) to advertise their services to “move” customers’ policies to other insurers.

Asked whether Old Mutual has seen an exodus of customers following the bad publicity, Ross said the company is monitoring the trend.

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“We’ll see what is happening from a customer exit perspective. But there isn’t anything that has caused us alarm.”

Old Mutual is, however, concerned about the outcry. “It feeds into the narrative that the broader insurance industry is not honouring their obligations,” said Ross.

“We are continuously refining and tweaking the way in which [we] communicate to customers. But we need to do more, and also talk internally about the conversations we want to have with our customers.”

Old Mutual’s share price closed at R12.07 yesterday – 1.15% lower than Tuesday and down more than 6% so far this year.

This article was republished from Moneyweb. Read the original here