IPEC urges funeral assurers to be innovative as pressure from life assurers persists

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  • Funeral assurance sector wrote only 10.17% of funeral business in HY2020
  • Sector continues to be affected by adverse economic challenges
  • Inflation adjusted GPW declined by 45.63%

Harare – Insurance and Pensions Commission (IPEC) has urged funeral assurers to be innovative through coming up with products that foster financial inclusion as they risk becoming irrelevant due to competition from life assurers.

The funeral assurance sector wrote 10.17% of the entire funeral business for the half-year ended 30 June 2020 compared to life assurers who wrote 89.83% of the funeral assurance business.

IPEC said the persisting trend suggests that funeral assurers are at risk of becoming irrelevant and obsolete in the absence of innovative products or other survival strategies that can withstand pressure from life assurance entities.

In the previous quarter ended 31 March 2020, funeral assurers wrote only 6.73% of the total funeral business while the remaining share was held by life assurers.

The Commission therefore encouraged funeral assurers to be innovative by developing products that incorporate those that are financially excluded.

Two funeral assurers, Moonlight (59.80%) and First Funeral (20.54%) wrote 80.34% of GPW in the period under review while the remaining five wrote 19.65% of funeral assurance business.

The funeral assurance sector continues to be negatively affected by adverse economic challenges that have contributed to the decrease in the persistency ratio and GPW.

Inflation-adjusted GPW declined by 45.63% from ZWL$12.393 million for the six months ended 30 June 2019 to ZWL$6.738 million for the six months ended 30 June 2020.

“The importance of innovation cannot be over-emphasized, in view of increased competition vis-à-vis the inflationary macroeconomic environment and declining real incomes”, IPEC said.

In a report for the first quarter of 2020, IPEC said, the increasing competition from life assurers in writing funeral assurance business is a threat which underscores the need for funeral assurance sector players to be innovative and aggressive in terms of writing new business and tapping into the uninsured market.

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