Use cases of Tale of Data in Insurance
How to solve the problem of unclaimed contracts in banks and insurance companies?
The escheatment of bank accounts and life insurance policies is a technically complex subject to master by a certain number of banks and insurers. Some of them have been recently and heavily sanctioned by the ACPR.
Why such sanctions?
The Eckert law obliges banks and insurance companies to identify dormant accounts and contracts. This implies for the concerned services of these establishments to search and inform the holders and the beneficiaries within the legal deadlines.
However, in practice, this research is not very fruitful. Indeed, it is necessary to have quality and updated data in order to maximize the chances of crossbreeding. And it is at this level that the research work becomes very difficult. Indeed, the main problem is to process the data in a relevant way in order to obtain reliable results.
For this, the application of a research method is essential, as is the implementation of specific tools to comply with the Eckert law. Technological solutions exist and now make it possible to match data with precision.
1. The state of the escheated contracts market in France
The phenomenon of escheated contracts is proving to be of a greater and more lasting magnitude than initially estimated at the time of the adoption of the Eckert Law in 2016. As a reminder, at the end of 2017, the Caisse des Dépôts Consignations (CDC) had €4.7 billion in unclaimed contracts.
1.1 Limitation periods under the Eckert Law
Unclaimed funds are transferred to the CDC by banks and insurance companies after a certain period of time.
When no transactions have taken place for twelve consecutive months on a bank account and the holder has not contacted the bank or the holder is deceased and the beneficiaries have not asserted their rights after a period of one year following the death, the bank or insurance contract falls into escheat. Normally, banks and insurers are required to keep escheated contracts in their management system for a few years. During this period, they have the obligation to find the owner or the beneficiaries of the contract. The time limit is five years for savings books, term accounts, securities accounts and PEE (company savings plan). Whereas the limitation period applicable to life insurance contracts is ten years. Once these deadlines have passed, the funds from escheated contracts are transferred to the Caisse des Dépôts et Consignations. The Caisse des Dépôts et Consignations must then keep them until the end of the thirty-year statute of limitations. At the end of thirty years, if the policyholder or his heirs have not made a statement, the unpaid funds are definitively transferred to the State.
1.2 The total amount of unclaimed contracts is increasing
The Eckert law is very clear on the role to be played by banks and insurance companies. Since some of the major banks and insurance companies have been pinned down by the ACPR, many of them are looking for effective solutions to reduce their number of escheated contracts. Despite these efforts, at the end of 2020, Caisse des Dépôts et Consignations received 54,898 escheated life insurance contracts for a total amount of 172 million euros. Overall, since the adoption of the Eckert Law, the amount of unclaimed escheated contracts is exceptional. All the bank and insurance products combined in escheatment represent more than €6.4 billion that the CDC must keep for 30 years.
2. Why are there so many unclaimed contracts?
Unclaimed policies are policies that have not been claimed or paid out to the policyholder or beneficiaries upon the death of the policyholder. There are several reasons for these escheated contracts:
The insured has died and the heirs to the policy have not contacted the bank or insurance company to obtain payment of the capital.
The policy has expired and the owner has not requested payment of the principal.
The insured has died and his or her contact information is incorrect or missing: the insurance company cannot pay out the policy's capital.
It should be noted that the bank or insurance company is not always informed of the death of the contract holder.
In the first instance, it is the responsibility of the holder's family and friends to inform the bank or insurer in the event of the holder's death.
In the second stage, banking and insurance institutions are responsible for identifying deceased customers.
To do this, they can query the databases of the Répertoire National d'Identification des Personnes Physiques (RNIPP) which specifies whether a person is alive or dead. The entry point in this file is made from the AGIRA (Association pour la Gestion des Informations sur le Risque en Assurance) at the request of the insurance company or the heirs.
However, this is not an easy task, as the data coming from the management departments of banking or insurance institutions is not homogeneous. Often, this data is not reliable and contains input errors such as typographical or transcription errors. With an adapted technological solution, these errors are intelligently treated by upstream algorithms.
3. The issue of data quality
Data quality is at the heart of the problem of escheated contracts. To successfully cross-reference data, it is important to have relevant, complete and accurate data. From the start, the information in the management systems of banks and insurance companies must be corrected.
3.1 Types of errors
Very often, the most common types of errors are spelling errors due to typing errors, for example (reversal of two letters, acronyms, inadvertent or deliberate spelling errors, etc.). A name can be written in two different ways, but the similarity of the two spellings is difficult for a computer to handle. There are also other types of data that cause cross-referencing problems. These are the abbreviations for addresses (av. for avenue) and dates (87 for 1987).
The difficulty in matching data lies in being able to homogenize each data item using intelligent parameters. However, the presence of inaccurate data in the information transmitted during the queries made by AGIRA does not give satisfactory results. The solution is therefore to make corrections and enrichments directly in the internal management systems of the professional actors.
Covering a wider area or proposing corrections on all fields such as names, surnames and addresses makes it possible to find a balance between the quality of the corrections made and the number of data to be crossed.
3.2 Phonetic or measurement algorithms
To do this, it is necessary to set up a system of algorithms that can perform the join between two data tables by matching on several columns of flows. It is even interesting to develop a fuzzy matching algorithm directly from the RNIPP database.
Generally, the phonetic algorithm and the measurement algorithm are two approaches that can identify different errors (name variants, name inversion, insertion or deletion of punctuation, spaces, special characters, different spelling of names, e.g. 'Jon' for 'John', etc.).
The quality of the data within the management systems of banking and insurance institutions is essential to optimize the process of identifying the beneficiaries of escheated policies.
4. Find the right technological solution to manage escheated contracts
4.1 Sanctions for non-compliance with the Eckert Law
Non-application of the Eckert law is severely punished by the ACPR. At the end of May 2022, the bank Natixis Interépargne received a financial penalty of 3 million euros from the regulator for its faulty recognition system. It used the death bases of the INSEE, whose history ended in 2014. It also did not cross-reference with the RNIPP database. It also, for the most part, reactivated inactive accounts by mistake. It was based on the return of mail sent to the account holders as undelivered mail.
A month earlier, the ACPR had fined the insurance company Mutex a record amount of 8 million euros. The regulator accused it of a series of failures in its management of pension contracts, in particular the lack of action in the search for beneficiaries of unclaimed contracts. The insurer has put in place numerous tools that did not allow it to respond to the problems.
4.2 The Tale of Data solution
To avoid this kind of costly malfunction, Tale of Data has developed a solution to make corrections to improve the quality of raw data. Its application allows to match names thanks to the phonetic algorithm, to remove special or useless characters such as "born", "wife", etc. Some unwanted punctuation or spaces can also distort your search. Our tool makes it possible to get rid of these errors and to normalize your data whatever the format, the typology and the dimension. In fact, this new generation solution, integrated with our Tale of Data software, gives superior results to other competing solutions.
Thanks to the data cleaning operation, our algorithm can then perform the cross-referencing operations and facilitate their integration.
This process is ideal for matching the names of people in your database with other databases, internal or external, by comparing approximate matches. Our matching tool allows you to match information based on predefined parameters, possibly weighted according to the interest you want to give them.
4.3 A typical example that the Tale of Data solution effectively solves
To demonstrate the effectiveness of our solution, we present you with a typical example of a recurring problem in the search for the holders or beneficiaries of escheated contracts. In one of your files, you have a person in the name of Mrs. Malorie Jullien-Dunes. However, she does not exist anywhere else. With our tool, the algorithm will look for approximate matches and will propose several matches: Malaurie Jullien-Dunès and Malaurie Julien. Other criteria will allow you to refine these results by comparing the date of birth, the names of the beneficiaries if there are any, the address, etc.
For more information, you can send us some data to perform a test with our solution.