SINCE the advent of the global Covid-19 pandemic the funeral assurance industry has been affected the most as it had to handle an unprecedented death rate running into thousands. For a struggling industry like Zimbabwe, the impact has been keenly felt by the industry which has handled 70% of the total deaths as a result of the pandemic. The Zimbabwe Association of Funeral Assurers (Zafa) held its annual conference in Bulawayo recently and our commercial manager Olayayi Jack spoke to Zafa president Arthur Mukasi (AM) who called on the industry to come up with ways of value preservation in an economy blighted by currency volatility. Below are the excerpts of the interview:
OJ: What has been the industry’s experience with the Covid-19 pandemic?
AM: The Covid-19 pandemic came with its own fair share of challenges. As an industry, we experienced a surge in the number of claims as a result of the pandemic. In Zimbabwe a total of 5 500 deaths were recorded whilst 6,4 million people died across the globe. We had to cope with an increased number of burials thereby stretching our resources in order to provide burial services. Financially we had to deal with unbudgeted expenditure on protective clothing, equipment and IT infrastructure to enable remote working. Premium income dropped as some clients, especially in the informal sector, did not have any sources of income. There were new safety and health regulations as a result of the pandemic. Our employees had to be trained by the relevant ministries and government departments to ensure they are protected. Despite all these challenges, I would like to commend the industry for showing their resilience and ensuring that our clients were given decent burials.
The need for us to co-operate within the region and abroad was reinforced during the pandemic and cannot be overemphasized. Body repatriations from different countries and the ensuing variations in regulations make it mandatory for us to work together so that we benefit from the synergies and efficiencies in the value chain.
We are in the second wave of hyper-inflation at 256% as at the end of July and this has been worsened by the Ukraine-Russia war. The cost of providing services is not only following the ever-changing black market rate but also going up in US-dollar terms for example fuel which is one of the major costs of service provision. On the flip side, premiums are not increasing at the same rate leading to a disproportionate increase in costs. Our business model, a defined benefit, is such that we provide a service and not cash and as such our premiums have to keep up with inflation. The current environment makes it difficult to preserve policyholder value, as returns on investment continue to be eroded by inflation. It calls on us all as an industry, to come up with ways of value preservation in such an environment.
OJ: The 2022 conference ran under the theme “Towards a more resilient post-pandemic future in the funeral industry value chain”. How relevant is this theme?
AM: We have come out of the Covid pandemic where there was an unexpected surge in claims as more people died. The industry was stretched in terms of resources and the cost of providing services increased. Despite these challenges we managed to service the claims. The unique business model of blending assurance and services made it possible for the industry to withstand these challenges. It was therefore necessary for the industry and all stakeholders to evaluate the value chain and come up with strategies on how we can improve going forward.
OJ: What would you say have been the major setbacks for Zafa and its members in relation to the pandemic?
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AM: The funeral industry is part of the health value chain and as such should be continuously recognised and involved on health-related issues and not only when disasters such as Covid-19 emerge. The association will continue to push for continuous engagements with the various stakeholders.
OJ: During the pandemic period, how many deaths were recorded or how many were handled by your members?
AM: Statistics show that close to 5 500 deaths were recorded due to the pandemic. Out of these more than 70% were handled by the members.
OJ: As an industry what lessons have you drawn from the pandemic?
AM: The need for investment in more robust IT infrastructure to enable remote working, premium collection, new business acquisition and business continuity. There is need to be better prepared for any shocks in terms of resources and infrastructure such as more hearses and parlours. Continuous stakeholder engagement with government ministries and departments on disaster preparedness is also key.
OJ: What milestones has Zafa achieved over the years?
AM: The establishment of the Zafa Funeral Business Management Academy meant to train employees within the industry has been a notable achievement. We have also created platforms for stakeholder engagement thereby continuously improving the industry. Currently the funeral industry has the least number of complaints from clients in the insurance industry and this points to improved ethical business practices and client engagement.
OJ: Can you please give us more details on the academy?
AM: The Funeral Business Management Academy is an institution established to offer courses in areas specific to the funeral industry such as Certificate of Proficiency in Sales and Marketing of Funeral Business and Mortuary Science and Undertaking among other courses. We also want these courses to be recognised across the region. Through these courses, employees and marketing agents will have a better understanding of the funeral business. The same courses will be offered to other institutions that deal with the deceased.
OJ: Ipec has proposed an information bureau sharing information to address the issuing of multiple policies. Is this something Zafa subscribes to and how do you see this benefiting the industry?.
AM: The proposal came up during the conference and it requires serious consideration. This will help manage clients with multiple policies. We are engaging the members and other players in the Insurance industry to appreciate the benefits and on the implementation modalities in the short term and the cost implications.
OJ: There have been repeated calls by Ipec to meet the prescribed assets threshold yet none of the funeral assurers are currently complying. What is Zafa doing to work towards this?
AM: As Zafa we continue to encourage our members to comply with regulations including investing in prescribed assets. However, given the current hyperinflationary environment not much of these assets on the market are giving a return above inflation. The Association is however considering investing in infrastructure projects in the medium-to-long term in line with our business model from which we will seek prescribed asset status. That way, we believe, policy holder value will be preserved.
OJ: Going forward, do you have any new plans to grow the vision of Zafa?
AM: To work with all stakeholders and funeral assurers within and outside our borders as we share notes on how we can improve and better resource the industry. Training of employees within the industry through the Zafa school also remains one of the focus areas. The insurance penetration rate is still very low at 3%. There is a need to incentivise those who take funeral policies through engagement with the relevant authorities. Exemptions for members who wish to import equipment and hearses to capacitate the industry will help boost the industry.
