INSETA CEO Sandra Dunn
The Insurance Sector Education and Training Authority (INSETA) this week hosted its first ever Burial Society Indaba in Johannesburg – bringing burial societies together for the first time to discuss ways to organise, expand and improve the sector and its services.
The INSETA summit took place at the Turffontein Racecourse on 23 and 24 March and enjoyed a bumper turn out as burial societies in Gauteng welcomed the opportunity to gain formal recognition for the important role they play in local communities and to build a more formalised and professional industry.
INSETA CEO Sandra Dunn said the massive footprint of the sector within South Africa’s mainly black communities meant there was huge potential for wealth creation that was not currently being taken advantage of.
“Research has shown that more than 20% of the South African adult population are members of a burial society, so the importance of this sector must not be underestimated. Burial societies also represent a significant spend with members prioritising 15% of their income towards this financial product, totaling R4.5 billion rand per annum.
“The interaction and synergy between traditional burial society cover and more formal financial products creates significant opportunities and challenges, which we are now exploring together,” she said.
This sentiment was echoed by Leon Mfaba from Old Mutual, who addressed the gathering on products which Old Mutual had customised for this sector.
A new regulatory framework is also being developed to regulate the micro insurance market. Doubell Chamberlain of Cenfri/Finmark Trust, an organisation which has assisted Government with the proposed micro finance regulations that have been drafted, spoke positively about the new regulatory framework at the Indaba.
The proposed regulatory framework adopts: A product-based approach to reduce risk of micro insurance; Reduced entry and compliance requirements in line with lower risk (aiming to create space for smaller micro insurers, including mutuals and to create space for innovative intermediary models, including advice-based models); and Improved enforcement and recourse.
Abe Mkhize, a representative of community development organisation Impucuko Projects, attended the Indaba and said burial societies there shared their concerns with INSETA and government, admitting that they were in need of assistance where skills development and enterprise development was concerned.
“Burial societies are by and large operating with scarce resources and not getting maximum benefit from the money being invested. They called for formalisation but also asked that government be flexible and enabling when it comes to regulating the sector,” said Mkhize.
Concerns were also raised about the general levels of financial literacy within the sector, with burial societies saying these would need to be improved if they were to expand their services and develop into more formalised enterprises. There was general consensus that burial societies would need to register as co-operatives in an endeavour to become more professional. However, the process of registration was complicated and INSETA has committed to provide capacity building workshops in this area.
Many young burial society members used the opportunity to raise awareness of the rising numbers of unemployed youth. Despite positive growth being experienced in some sectors of the economy, there was not a concomitant increase in employment creation. The Gauteng Economic Planning Unit was in attendance at the Indaba, and the province has identified the development of a SMME and Co-operative Observatory as one of the key interventions in its employment led growth strategy. An estimated R5 billion rand is spent on funerals annually in South Africa.
“There has been no significant penetration of this sector beyond funerals. Opportunities for diversification would benefit the societies as well as create more financial security within our communities,” said Mkhize. Other proposed solutions – such as expanding services to incorporate retirement packages and other investment opportunities – were also discussed at the Indaba.
Another worrying factor that the sector faces includes the high prevalence of HIV and AIDS-related deaths, and the shrinking effect this was having on their market, the burial societies said.
Lusani Mulaudzi from the Actuarial Society of South Africa touched on this in a presentation, saying that the epidemic would continue to “increase claim pressure” on burial societies in the years ahead. Better insurance cover was needed to guard against these pressures, he argued.
A 20 member Burial Society Task Team was established at the Indaba to oversee the set up of a National Structure to serve the interest of burial societies.
“Burial societies need to organise themselves to become more competitive in the economy. We hope to help both them and their significant market through this Indaba and future interventions. Even in the current unregulated space, the sector has mass market appeal – we therefore need to develop a working framework that allows the societies and their members to get the most out of the large amounts of money already being spent on funeral cover,” said INSETA CEO Dunn.
“This Indaba has started the dialogue and we are pleased at the response it received. Those in attendance gave us their endorsement and made it clear to us that our assistance is needed and wanted,” she added.
For more information call INSETA on 086 113 0013.
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