TINASHE MAKICHI
Funeral assurance companies are lobbying Government to make funeral policy premiums tax deductible, or qualify for a tax credit, in the hands of individual taxpayers. Medical aid contributions are treated the same way.
Zimbabwe Association of Funeral Assurance (ZAFA) president, Solomon Chikanda, told delegates attending the association’s fourth annual conference in Bulawayo, that funeral assurers recognise their responsibility but Government must also come up with interventions that will improve the industry.
The conference is running under the theme, “Funeral business – a call to serve’’
“As funeral assurers, we recognize our responsibility and we will continue to comply the with prescribed requirements and to support government’s projects and efforts towards sustaining the economy.
“In an effort to increase the uptake of funeral cover by the public, the industry is kindly proposing to the Ministry of Finance, through the Insurance and Pensions Commission, that funeral policy premiums be tax deductible or qualify for a tax credit in the hands of the individual tax payer in the same way that medical aid contributions are treated,” said Chikanda.
His sentiments come at a time when Funeral Assurers have been pleading with Government to be spared from the proposed increase in minimum capital requirements at $2,5 million from $1,5 million, highlighting that the majority of their business is purely micro insurance.
The move by Government announced by former Minister of Finance and Economic Planning Patrick Chinamasa in his 2017 National Budget, is aimed at cushioning policyholders from weak and insolvent insurers.
Chikanda noted that the funeral assurers understand the need to raise the minimum capital requirements but the liquidity situation in the country has remained a challenge.
“We have also taken note of the need to raise our minimum capital to the new levels as prescribed. However, liquidity and other economic the country is facing may slow down our pace as we strive to meet the set deadlines.
“This is a critical issue for the industry which may increase funeral policy uptake and increase insurance penetration, resulting in the country meeting its financial inclusion goals,” he said.
The funeral assurance industry continues to grow as total assets grew to $70 million as at December 31, 2017 from $61,7 million on December 31, 2016 which is a 14 percent growth.
According to Insurance and Pension Commission reports, the funeral assurance industry’s premium income grew to $39,9 million for the year ended December 31, 2017 from $38,6 million last year 2016 which is a 4 percent growth.
Chikanda said the business operating environment is changing on a daily basis bringing with it new stakeholder needs and expectations. This calls for new thinking among funeral companies so that there is growth in business and investments protection.
“May I remind us as players that a funeral policy is a solid and legally enforceable promise to provide our funeral or burial services to our customers.
Therefore, as funeral industry players, we must deliver this promise as pre-agreed with our customers. There should not be any doubt in our minds that such fulfillment of funeral policy obligations becomes the standard that we are measured by not only our customers (both current and prospective new clients) but also by the regulator.”
The conference is being attended by officials from America, South Africa, Kenya and Botswana.
