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Members of one of Cork’s largest credit unions are poised for a windfall from an old death benefit insurance (DBI) scheme that had to close.
Gurranabraher Credit Union will announce details Tuesday of a plan to reimburse contributions, totaling about 2.5 million euros, made by its estimated 15,000 members in the DBI scheme that operated between 2003 and 2019, when a law change forced the scheme to cease.
Directors of the credit union said they had decided to return all member contributions ex gratia, and that payments would be made directly to members’ accounts beginning Wednesday. Refunds will be worth several hundred euros for each member.
The chairman of the board of directors, Eamonn Kirwan, said they were aware of the disappointment of the members when the plan was suspended in 2019.
“We have been discussing this in great detail for some time,” he said.
“Given the disappointment felt by members, we have decided to refund the premiums.
“We have strong reserves and this is somewhat prudent. We can handle this comfortably. “
DBI is a unique service offered by some credit unions to eligible members.
The schemes, which varied from one credit union to another, saw members agree in their AGMs on the annual premium rate they would pay and the payment of a lump sum to be paid to the closest family members in the event of death.
The money, which in some cases could exceed 3,000 euros, was often used to help cover funeral expenses or to leave it as a bequest.
But in 2018, the government enacted the European Payment Services Directive 2, which required any financial institution that charged a premium from its members for a service to obtain the individual written consent of those members.
Gurranabraher’s DBI scheme was a 100% membership scheme and when it became clear that everyone’s written agreement could not be secured, the DBI scheme had to be discontinued.
“Some members may have wanted the plan to continue, however the change in regulations meant there was no viable way to do it,” Kirwan said.
He said they have been in contact with the Central Bank of Ireland since then on how to tackle the problem and have now decided to refund contributions to members.
Mr. Kirwan noted that there are still other important benefits related to the death of a member, including the traditional life savings insurance scheme, which provides for the credit union to double a member’s savings in the event of death, and the loan protection insurance scheme, which means that the loan dies with the member.
The refund will be made automatically as of Wednesday, March 3 and will equal the number of deductions made on members’ accounts from 2005 to 2018.
The credit union will operate a dedicated support line for account statement requests at 021-430 3394 from 9:30 a.m. M. At 5 p. M. Every day of the week.
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