FNB told MyBroadband it will soon be processing 4,000 credit insurance claims per day, following an influx of applications from clients.
FNB’s Credit Life insurance is designed to help South Africans pay their loan installments if they lose their income.
Given the number of South Africans not being paid due to the national lockdown, FNB has seen claims from this product increase significantly.
According to Product Head at FNB Life Sarah Janks, before the lockdown FNB was processing around 50 claims per day for this product.
Now, it is processing about 1,500 claims per day – and is working towards its 4,000 target.
This means FNB has had to work around the clock to increase its claims processing ability.
Credit Life claims
To deal with this dramatic increase, FNB has recently built the claims process into the FNB app.
Included in this is a built-in claims tracker which will inform you on the status of your application, tell you if you need to upload documents, and assist FNB in fast-tracking the claims process.
“We know that we need to do whatever we can to handle volumes as quickly as we can,” said Janks.
Janks said there are currently around 37,000 applications in FNB’s queue, which is why it is important that the bank optimises the claims process.
She added that FNB is also receiving many invalid claims, however.
Claims can only be valid if the client was permanently and formally employed, and has lost their full income for at least a full month.
Cash flow relief
One area where MyBroadband has received several complaints from readers is FNB’s “cash flow relief” plan.
CEO of Money Management at FNB Doret Jooste explained that this offers a superior alternative to a payment holiday.
FNB’s cash flow relief plan involves the bank covering the customer’s repayments across all of their FNB products for a three-month period, after which the customer has a period of up to 84 months to repay the bank.
FNB said the cash flow relief plan offers several benefits:
- No fees.
- Flexible repayment period.
- Ability to settle the amount earlier with no penalties.
- Repayment will only start once the three-month relief period is over.
- Prime interest rate.
“In the long-term, the total cost of credit for a payment holiday with a term extension is significantly higher than a cash flow relief plan,” said Jooste.
Jooste highlighted that the prime interest rate offered with the cash flow relief plan offers great value, as many products such as personal loans and credit cards are priced well above prime.
While some loans – such as home-loans – can be priced below prime, the cash flow relief plan can still offer superior value depending on how much of the loan must still be paid, said FNB.
Jooste said she is confident that in the majority of cases, clients will save money by choosing the cash flow relief plan.
However, clients who are uncertain should get in contact with an FNB consultant so they can run the appropriate calculations.
Where readers have taken issue is that they attempted to claim from the Credit Life insurance product, but before their claim was processed FNB offered them the cash flow relief option.
Janks explained this took place because certain customers have some of their products covered by Credit Life, while their other products are not covered.
These customers will therefore still find value in cash flow relief for the products not covered by Credit Life.
Jooste reiterated that Credit Life insurance will always be prioritised over cash flow relief for eligible customers.
“Even if they don’t apply, if they have it we will see and we will follow that route,” said Jooste.
“In the best situation they will be able to cover all costs and not need the cash flow plan.”
“If they don’t, the cash flow plan will come into effect,” Jooste said.