BULAWAYO – The funeral assurance sector registered a 56 percent growth in net profit to $2,54 million for the year ended March 2016 as claims dropped, the industry regulator said on Monday.
Insurance and Pensions Commission commissioner Tendai Karonga told the Zimbabwe Association of Funeral Assurance (ZAFA) conference that the industry had seen its gross written premium grow by 9,8 percent to $40 million during the period.
“Profit increased by 56 percent,” he said. “The increase was on the back of decreases in claims as well as commission.”
Karonga said the funeral insurance industry continued to grow despite economic challenges facing the country.“This growth is owing to the fact that giving our beloved ones a decent send-off has become as “basic necessity.”
The industry saw its sets grow by 15 percent to $60,8 million during the period.Mr Karonga said IPEC was pushing for the adoption of new Risk Management and Corporate Governance guidelines by the industry to improve management of companies.
“The funeral assurance industry is faced with a challenge whereby most of the assurers are owner managed,” Karonga said.
“This challenge manifests itself in the form of overbearing individuals with funeral assurance companies which is a rich breeding ground for siphoning of policyholder funds.”
The industry is currently made up of nine funeral assurers, 11 life assures and a host of funeral service providers.
Mr Karonga urged the industry to come up with new products to go hand in hand with economic trends where most companies were downsizing and closing.
“This has resulted in low uptake of insurance products, premium debtors and an increase in lapse ratios,” he said.
He urged the industry to come up with mechanisms such as whistle blower facilities to address cases of insurance fraud which were a threat to the sector.
“Companies that have whistle-blower facilities have managed to curb fraudulent claims from either employees or external stakeholders,” he said.
Robust technology systems and appropriate financial control mechanisms were also crucial in addressing insurance fraud. – New Ziana