Insurer Backs Down on Funeral Cover Sales to Welfare Kids

  • Lion of Africa withdraws case to make deductions from grants
  • Civil society group sees end of court bid as victory for poor

South Africa’s Lion of Africa Life Assurance Co. ended a court bid aimed at protecting its right to make deductions from child welfare payments for funeral cover.

In the Constitutional Court on Thursday, Lion of Africa agreed not to enforce a December interdict, which would have prevented the South African Social Security Agency from imposing a moratorium on taking money from children’s grants to pay for funeral cover.

“This is a great win, particularly for children on welfare who come from poor communities and poverty,” Nomonde Nyembe, an attorney representing civil society group Black Sash Trust, said in an interview after the decision was announced.

The withdrawal comes after South Africa’s government this month introduced new regulations, which prevent deductions from children’s grants. This made Lion of Africa’s case moot. Lion of Africa previously said it had not made any deductions from children’s grants since December.

The state pays welfare to about 16.9 million people, who remain among South Africa’s most vulnerable citizens. The government last year recorded more than 13,000 disputes between social-grant recipients and companies ranging from loan providers to electricity and water utilities making such deductions.

Only deductions for funeral cover were legally permitted, though the new regulations will make these illegal from November.

“Lion of Africa Life is not, and has never been, opposed to the prevention of deductions from child support grants,” the company said in an e-mailed statement. The insurer said it had only challenged Sassa’s moratorium because it believed the agency did not have the authority to change policy.

Chief Justice Mogoeng Mogoeng approved the withdrawal on Thursday.

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