FUNERAL Assurers say Government must spare the sector from the proposed increase in minimum capital requirements to $2,5 million from $1,5 million, arguing that the majority of their business is purely micro insurance in nature. Zimbabwe Association for Funeral Assurers (Zafa) president Solomon Chikanda told The Herald Business that the business model of funeral companies is service provision oriented and therefore should be spared from the proposed increase in capitalisation levels.
“I want to highlight to the Insurance and Pension Commission (IPEC) Zafa’s position with regards the new minimum capital levels.”
“We are aware the noble intention is to cushion policyholders from weak and insolvent insurers. However, our business model as Zafa is service provision-oriented.
“Our investments such as hearses, mortuaries, buses, coffin manufacturing is geared towards providing uncompromised service to clients in line with the promised contractual obligations,” said Mr Chikanda.
“We therefore ask that our industry be spared on this one as our business is purely micro insurance in nature,” he said.
The move to increase minimum capital requirements for funeral assurers was announced by Finance Minister Patrick Chinamasa in his 2017 National Budget and is aimed at cushioning policyholders from weak and insolvent insurers.
Meanwhile, Mr Chikanda said Zafa is committed to supporting Government projects and efforts in rebooting the economy through compliance with prescribed assets requirements.
Through the guidance and support of IPEC and the Ministry of Finance and Economic Development, the funeral assurance industry continues to surpass expectations as total assets grew to $61 million as at December 31, 2016 from $51 million as at December 31,2015.
According to IPEC reports, the funeral assurance industry’s premium income grew from $36 million in 2015 to $38 million for the year ended December 31, 2016.
In addition, Mr Chikanda said the association has identified a serious skills gap in the industry that may threaten the provision of quality and professional funeral services.
He said the business operating environment is changing on a daily basis bringing with it new stakeholder needs and expectations.
“This calls for new thinking amongst us so that we grow our businesses and protect our investments while at the same time delivering the promised service to our clients.
Mr Chikanda explained that- a funeral policy is a mere promise to provide the holder with a funeral or burial service.
“Therefore as funeral industry players, we must not fall short when called to fulfil our contractual promises because that is the only way our performance is measured by our clients.”
Mr Chikanda said it is imperative that all funeral practitioners appreciate the social, legal and economic repercussions of a failed funeral assurance promise.
“To this end funeral assurers have worked towards structuring products that are both affordable and accessible to all, including the previously marginalised groups,” he said.
Mr Chikanda said Zafa has also noted with concern the abuse of funeral policies or funeral cash plans through fraudulent claims by some members of the public.