The Insurance and Pensions Commission (Ipec) has told Funeral Assurance companies to develop strategies that will help them tap into the low income earners’ market.
This comes after revelations that new business volumes in funeral business continue to be critically low.
According to the Ipec, 2017, Second Quarter Funeral Assurance Report, of the total net written premium, new business only contributed a minute 4 %, with recurring business contributing the other 96 %.
Passion Funeral Assurance had the highest growth rate in terms of new business with a 700% growth in Individual business and 400% growth in Corporate Business. Whilst Orchid and Sunset did not write any new business for the quarter under review.
Three of the Nine Ipec registered funeral assurers had negative new business growth rates.
According to the 2014 FinScope Survey, 70 % of the Zimbabwean population do not have insurance cover. And of the 30 percent with coverage 77% have funeral cover.
Statistics also estimate that 90 % of the Zimbabwean workforce are employed in the informal sector but do not have access to financial services and insurance cover due to issues of affordability.
Market research also shows that, a decent and respectful burial is regarded highly in the Zimbabwean society, however due to high burial costs and the fact that the premium charges for traditional funeral cover benefits are beyond the reach of many Zimbabweans, many end up having a pauper’s burial.
Ipec says Funeral Assurers should tap into the popularity of funeral products in the market and develop products that are targeted at the low income, and the informal sector, who apparently constitute the majority of Zimbabweans.
“Funeral assurance industry players should put in place strategies that will enable them to take advantage of opportunities that presents themselves including those in microinsurance,” said IPEC.
Ipec also encouraged players in the industry to properly train their agents and staff, so as to prevent mis-selling of funeral products. Which may be attributed to the low uptake of funeral assurance products.
Meanwhile players in the funeral assurance industry continue to retain 100 percent of the business they underwrite. With a very low ratio of not taken up policies to net written premiums.
During the period under review only Orchid had a high ratio of not taken up policies at 35.6 percent while the other 8 funeral assurers ranged from 0 to 1.94 percent.
Which to Ipec is well within commendable range.