Vusumuzi Dube
Robin Muchetu, Senior Reporter
FAMILIES have been encouraged to engage and ensure they do not have multiple funeral insurance covers for one individual but sign up for other packages like health insurance that assist the individual to be covered.
Multiple insurance coverage has been identified as undesirable as families turn up with more than one funeral policy cover for one individual upon their death leading to all other policies falling away and cash in lieu of services being offered instead which sometimes is inadequate to cover some funeral expenses.
This prompted the Insurance and Pensions Commission (IPEC) to call for the harmonising of the insurer’s registers which will automatically identify if a client has been registered by another insurer already. However, this has been met with a lot of resistance as various life assurance companies have not been at liberty to have a harmonised system that will pick up these multiple entries.
IPEC Director of Insurance Mrs Sibongile Siwela said multiple funeral policies pose a challenge yet they can be reviewed and assist the beneficiaries in other areas.
“We are aware of the problem with multiple policies and to address the issue, we issued a funeral directive to the insurers offering funeral policies to correct this. Before this, we had informed the insurers to come up with a database that they could all go into and check if the person proposing to take an insurance policy has another policy so that they would not accept that person. However the funeral assures said they were competitors and were not amenable to the idea of sharing databases,” said Mrs Siwela.
Following this predicament and resistance by the funeral assures, IPEC then issued another directive regarding this setup.
“In that respect, we came up with a directive to say if you accept a policy and accept premiums you should pay the actual sum assured regardless of whether the policyholder has another policy or the beneficiary on the policy is covered elsewhere by another policy. We expect insurers to oblige to respect that directive and to comply with it,” said Mrs Siwela.
IPEC however said the media has a role to play in educating communities to engage each other when they are taking out funeral insurance for their family members.
“The media should educate the public that as families they must discuss these things for instance, if siblings decide on who is going to cover their father or mother on their policy so that other family members can cover other areas like health insurance so that they avoid the multiple insurance policies. It also speaks to an awareness of families discussing these things as people tend not to discuss them at the family level,” said Mr Lloyed Gumbo, the Public Relations Manager at IPEC.
According to the IPEC Life Assurance Sector Reporter for the Quarter ending 31 March 2024 funeral assurance was the major class of business written by the life assurance sector accounting for 65.88 percent of total revenue.
“There were 12 registered life assurers during the period under review. During the period under review, direct life assurers reported insurance revenue amounting to ZW$485.88 billion. The two main products driving life assurance revenue were funeral assurance and group life assurance business, which constituted a combined 84.48 percent of the total revenue. Nyaradzo Life Assurance Company continued to dominate the life sector in terms of insurance revenue with 40.1 percent of the market share, driven by the funeral assurance business as the major source of revenue,” reads the latest report.
The report notes that the Commission remains committed to providing a conducive regulatory environment that fosters the development of appropriate long-term life assurance products.
To this end, the Commission called on life assurers to be innovative and come up with appropriate long-term products that meet the needs of consumers. There were also engagements with the Government to create an enabling environment for the uptake of long-term products as life products are key in mobilising funds for long-term savings for financial intermediation in the economy.
A cross-section of society has been up in arms with funeral assurers over the termination of funeral policies when they fail to pay premiums within a specific period. They argued that they have lost their premiums which they contributed for years, when they fail to pay for one month.
“At the beginning of the first quarter of 2024, the sector had a total of 1,624,225 lapsable policies, of which 44,150 policies lapsed during the same period translating to a lapse ratio of 3.27 percent, a decrease from 11 percent recorded during the same period in 2023. A lower lapse ratio is always preferable as policyholders remain covered even if premiums are reviewed. The Commission called on life assurers to give policyholders an option to downgrade their policies should they not afford the new premiums,” further reads the report.
Insurers were urged to effectively communicate premium reviews and convey the right message to the policyholders to minimise lapses and people losing out.
IPEC further said it is also important for life assurers who write funeral policies to follow the dictates of section 60 of the Insurance Act [Chapter 24:07], which gives policyholders grace periods on the lapsing of policies.
@NyembeziMu
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