Demand for funeral assurance high

Published: 18 October 2017

The funeral assurance industry saw its gross written premiums jump 13 percent to $80.3 million in the first half of 2017 compared to the same period last year as demand for its services remain high, the Insurance and Pensions Commission (IPEC) said on Wednesday.

Profitability of the companies, however, slumped 40 percent to $2.79 million, hit by an increase in operating expenses and a marginal 0.42.increase in claims.

"Gross written premiums grew by 13 percent for the half year ended 30 June 2017 compared with the same period last year (from $70.85 million to $80.27 million)," IPEC said in its first-half report for the sector.

"This continued growth highlights the increase in demand for funeral assurance products."

The industry is made up of nine companies - Doves, Orchid, First Funeral, Foundation, Moonlight, Passion, Ruvimbo, Sunset and Vineyard - with no new licenses having been issued or any cancelled during the period.

IPEC said the sector remained liquid, which put it in a "safe zone" in terms of meeting its liabilities.

"For the half year ended 30 June 2017, the average current ratio of the industry was 177 percent which puts the industry in a safe zone in terms of its ability to meet liabilities," IPEC said.

"However due to the uncertain timing of claims liability and the concentration of the industry's assets in non-liquid asset, liquidity risk still exists in the industry. Players still need to increase assets they invest in cash and cash equivalents."

The industry's overall assets grew nine percent to $61.5 million during the period.

Players in the sector operated 102 branches across the country, employing 377 people in the six months of the year.

Meanwhile, some players in the sector owed their members $48 000 in outstanding claims.

Majority of the claims had not been paid for period extending to 60 days.

First Funeral led the way with 26 outstanding claims followed by Orchid at 13, Ruvimbo with five and Sunset with four.

"Funeral claims are urgent in nature and should be settled within 48 hours," IPEC said.

- New Ziana

Tags: Assurance,