Local funeral assurance companies are set to review their premiums after the Zimbabwe Association of Funeral Assurers (ZAFA) approved their request.
The upward review has been motivated by issues around the sustainability of funeral assurance companies within the prevailing economic climate, which has seen a sharp rise in prices of most goods and services.
It has also been influenced by the firms’ desire to maintain the standard and quality of service delivery.
Zimbabwe is currently experiencing acute foreign currency shortages due to low industrial production. And to address these and other challenges, the Ministry of Finance and Economic Development has embarked on pursuing inevitable positive austerity measures that will see the country becoming an upper middle income economy by 2030.
But misinterpretation of the austerity measures by the certain sectors of the economy have seen unjustifiable price increases which impacted negatively on business operations and in the process crippling service delivery.
In response to the waning value of subscriptions from assurance policy holders owing to the rise of prices, funeral assurance companies made a request to the Zimbabwe Association of Funeral Assurers for an upward review of premiums.
“In order to preserve the value of funeral policies as well as to maintain the standard and quality of services provided to its valued clients, the Zimbabwe Association of Funeral Assurers (ZAFA) has consented to a request for premium review by all its members,” said the association in a statement.
Contacted for an explanation on the specific reasons brought forward to ZAFA by its members, the association’s general manager Mr Taka Svosve reiterated that the assurance service providers have been affected by fluctuating prices of whatever they use in delivering the service.
“It is now difficult to obtain hard currency to buy embalming fluid, a chemical that is used to prevent the putrefaction of the deceased,” said Svosve.
He also pointed to the difficulty in paying the necessary mortuary service fees due to the “eroded value” of individual subscriptions.
Among other reasons to justify premium reviews, Svosve identified the issue of high transport costs.
“Securing transport for funeral logistics is now expensive as the tyres are mostly selling in United States dollars. Premiums for most funeral policies have remained static for a long time despite the dynamic financial settings and this is affecting the smooth delivery of funeral services,” said the ZAFA general manager.
He emphasised that death is unpredictable and as such premiums must be workable at any given time so that funeral service providers do not incur losses.
ZAFA’s consent to the premium review request has been necessitated by the volatile nature of the economic environment which rendered previous premium levels in-conducive for funeral parlours.
“The association assented to the premium review cognisant of the changes in economic fundamentals underpinning service delivery.
“Members will be making individual announcements to their respective clients detailing the intended premium review,” said ZAFA.
Asked on whether the association decides on the minimum and maximum figures as margins for all its member companies, Svosve maintained that the funeral parlours do “differ on the size and quality of the services they offer and the policy categories they have for their respective clients.”
To this extent, it is up to the funeral assurance companies to determine what is better for them in terms of premiums.
The provision of sound service delivery to the generality of the public is very imperative in the quest to align various sectors of the economy with the mantra of making Zimbabwe to attain its middle income status by 2030.