Covid-19 vs Funeral Assurance: Counting the cost of life and death

AFRICAN funerals are large-scale and can require a significant amount of cash resources – Zimbabwe is no exception.

Funeral parlours have had to suspend certain contractual services like mourners’ transport and chapel services due to the Covid-19 pandemic

Traditionally they are expensive events that families share with the community as they – at worst can last up to five days before the deceased is buried. This resulted in many Zimbabweans paying for some kind of ‘funeral plan.’

With banks and insurance companies competing over funeral policies, more consumers in recent times were choosing funeral insurance over funeral service societies, where families would have traditionally pooled money to cover expenses.

Today a funeral in major urban areas such as Harare, Masvingo or Bulawayo can cost up to US$800 until the final resting place if the deceased is not on any funeral policy. This is way more than the average US$150 earned by most civil servants in Zimbabwe.

Grace Gumbo, who earns less than US$100 as a general hand at a retail outlet in Harare says she struggles to manage her finances. “I still battle to pay my rent, and put food on the table. But it’s important for me that I have a funeral policy. But with the effects of Covid-19 the only thing that matters or me and most of my friends is food, rentals and paying utility bills.”

Gumbo said she has defaulted on her funeral policy in order to make end meet due to the effects on the coronavirus (Covid-19) on business. This is despite the fact that funeral assurer had frozen upward review of their premiums as many organisation and individuals had stopped contributing due to disruption of normal business operations by the coronavirus (Covid-19) pandemic.

For her cousin Tendai Muyambo, it is a different story, he been consistent in paying her premium for himself and parents. But when Tendai’s mother died his funeral Assurance Company could not cover all the he has signed up to due to the Covid-19 pandemic.

Funeral parlours have had to suspend certain contractual services like mourners’ transport and chapel services thus eating into mourners’ savings.

However this did not go down well with some policyholders in as much as funeral assurers were ready to pay cash in lieue of these services. Funeral assurers therefore found themselves between a rock and a hard surface.

However the Zimbabwe Funeral Funeral Assurer (Zafa) said its members have begun reviewing premiums which had been deferred due to the increased number of companies and individuals that have stopped contributing.

Speaking during a virtual insurance and pensions mentorship programme, organised by the Insurance and Pension Commission in partnership with the National Social Security Authority last Tuesday, Zafa general manager Taka Svosve lsaid the “abrupt stop” to most business transactions when the lockdown was introduced in the country resulted in some companies and individuals failing to generate income thus deferring any premium reviews.

“It therefore became difficult for funeral assurers to receive or follow up on their premiums from both individual and group clients resulting in some unexpected shocks in cash flows,” he said.

He said while premiums were being eroded by rising inflation it was not easy for funeral assurers to review their premiums during the pick of the lockdown.

“Companies are now reviewing (premiums) gradually but cognisant of the fact that incomes are constrained…Both group and individual clients had their incomes curtailed due to the covid19 induced lockdown and could therefore not meet any new premiums increases.

Funeral assures had no option but to defer any premium review but to the detriment of their cashlows and operational obligations,” Svosve said.

Taka Svosve

Svosve indicated despite the premium freeze against rising inflation, in order to preserve the value of funeral policies as well as to maintain the standard and quality of services provided to their clients, a premium review was inevitable going forward.

Just like any other sector of the economy the funeral industry is suffering or has suffered its own share of this covid-19 induced lockdown.

“Funeral assurers rely on visiting and meeting with potential clients for new business. However with most companies on covid-19 induced lockdown coupled with restricted movement for both human and vehicular traffic acquiring new business became a challenge.”

“When incomes of both individuals and corporates are suddenly cut as happened/happening during this Covid-19 pandemic naturally, getting new business for funeral assurances is affected.  Funeral insurance is pushed to the bottom of the priority list under the circumstances,” said Svosve.

He said while funeral assurers have fully met and were fully meeting all claims including those of Covid- 19 victims, the number of fatalities from the pandemic had not resulted in unusual claims for services from funeral assurers.

“However in the event of a sudden increase in infections and subsequent deaths from Covid-19 (in case it happens), there is a possibility of a run on claims on funeral assurers,” said Svosve.

Zafa said an effort to curb the spread of Covid-19 funeral parlours had to suspend certain contractual services like mourners’ transport and chapel services.

“The World Health Organisation (WHO) and other national directives changed the procedure for conventional disposal of human remains in order to manage the spread of the diseases. All cases were to be treated as potentially Covid -19 related deaths…Funeral parlours had therefore to follow more stages right from removal to final disposal of the human remains yet burial was supposed to be done in the shortest period,” he said.