Life assurers outpace funeral assurers in own turf, underwriting 70% of the market

PHILLIMON MHLANGA

In the shifting sands of Zimbabwe’s insurance landscape, life assurers are making bold inroads into the funeral assurance market, claiming more than 70% of the business traditionally dominated by funeral assurers, Business Times can report.

What was once considered a niche within the funeral assurance sector has become a battleground where life offices are asserting their dominance with innovative strategies and competitive offerings.

This dramatic shift in market dynamics is not just reshaping the way Zimbabweans plan for death, it’s challenging the status quo of funeral cover provision in the country.

For Mavukeni Rufai, the secretary general at the Life Offices Association of Zimbabwe (LOA), the changes are nothing short of revolutionary.

“We’re witnessing a market evolution,” Rufai explains.

“Life assurers have recognized the growing demand for affordable, accessible funeral cover, and they’re stepping up to the plate in ways that have reshaped the entire funeral assurance landscape.”

Once considered the exclusive domain of funeral assurers, funeral assurance has now become a significant part of life assurers’ portfolios.

This market shift has left many wondering: what’s behind life offices’ sudden surge in this sector?

The answer lies in a combination of customer-focused innovation, enhanced product offerings, and the shifting economic realities in Zimbabwe. While funeral assurers have historically been the go-to for funeral cover, life assurers are leveraging their vast experience in long-term policy management and financial stability to appeal to a broader customer base.

With funeral costs continually rising, especially in an inflation-riddled economy, life assurers are offering plans that address the evolving needs of Zimbabweans, particularly those who seek a more reliable and comprehensive safety net.

“Funeral assurance is one of the most critical types of cover for Zimbabweans. It offers families peace of mind when faced with the inevitable. Life assurers have recognized this need and tailored their policies accordingly,” says Rufai.

“We now provide products that are both affordable and flexible, ensuring that even the most vulnerable families can secure the funeral cover they need without worrying about long-term financial strain.”

Indeed, it’s this flexibility that has allowed life assurers to carve out a dominant space in the funeral assurance market. Traditionally, life offices were associated with long-term policies with complex underwriting processes. But the shift in the market has seen life assurers streamline their offerings, providing funeral cover that is simpler to access, with faster claims processing and more transparent terms. This approach has proven to be a hit among customers looking for a practical, straightforward solution to the rising costs of funerals.

The impact is clear. In just the past few years, life assurers have increased their share of the funeral assurance market to over 70%. While funeral ansurers are still active in the space, they are struggling to keep up with the expansive reach of life offices. In some instances, life offices have even expanded their offerings to include funeral plans that integrate seamlessly with their long-term insurance products, giving policyholders a more holistic approach to their financial planning.

“The rise of life assurers in the funeral market is not just about pricing,” Rufai asserts.

“It’s about understanding the customer’s needs and offering them products that make sense for their lifestyle and their financial situation. We’ve moved away from complex, high-cost plans and now provide funeral assurance that is easier to manage, with affordable premiums and more inclusive coverage.”

With funeral costs in Zimbabwe growing steadily due to inflation and the increasing difficulty of managing household expenses, the simplicity and affordability of life offices’ funeral cover have become crucial selling points. Funeral cover is no longer just an added expense, it has become a necessity for the majority of Zimbabweans, who face the burden of funeral costs during times of loss.

This shift has also been spurred by the growing popularity of mobile payments and online platforms. Life assurers have embraced technology, offering digital platforms that allow customers to purchase and manage their policies online, providing a level of convenience and accessibility previously unseen in the industry. Mobile money systems, which are widely used in Zimbabwe, have made premium payments and claim processing easier, allowing policyholders to make payments from anywhere and at any time. This integration has given life offices a competitive edge, as they cater to Zimbabwe’s growing mobile-savvy population.

“Mobile platforms have been game-changers in the life assurance sector,” Rufai observes.

“We’re able to reach people in remote areas who would otherwise have limited access to our products. With a mobile phone, they can not only access funeral cover but also receive payouts quickly, ensuring they aren’t burdened by delays when they need support most.”

Furthermore, life offices have become more attuned to the specific needs of Zimbabwean families. With a growing number of people living in multigenerational households or sending money back to rural areas, the need for inclusive funeral cover has never been more urgent. Life assurers have responded by offering plans that cover extended family members, reflecting the communal approach that defines much of Zimbabwean life. This inclusivity is another reason life offices are gaining traction in the funeral assurance market.

“We understand that families in Zimbabwe don’t just consist of nuclear members; they’re often large, extended networks of individuals who rely on each other,” Rufai points out.

“Our funeral assurance products cater to this reality, providing cover for both immediate and extended family members, so policyholders don’t have to worry about the financial burden falling on one individual alone.”

Martha Moyo, a financial analyst at a leading Zimbabwean insurance consultancy, sees the rise of life assurers as a long-term trend.

“The shift to life assurers in the funeral market is indicative of a broader global trend, where life companies are stepping into funeral sectors to diversify their portfolios and tap into new revenue streams. Life companies bring financial stability, which is key in a volatile economy like Zimbabwe’s, and this stability gives consumers confidence in their products.”

However, she notes that while this shift presents opportunities, it also raises concerns about sustainability.

“The key challenge for life assurers will be managing claims effectively, particularly as more people come to rely on them for funeral cover. They will need to ensure that they are adequately resourced to meet the increased demand.”

Dr. Tendai Chigumbu, a professor of economics at the University of Zimbabwe, highlights the importance of affordable funeral assurance in a struggling economy. “In a country where many people live hand-to-mouth, funeral costs can be an enormous burden. The more affordable, flexible funeral plans offered by life assurers give people the chance to plan ahead without crippling their finances. This is especially important given the challenges faced by Zimbabwe’s middle and lower-income populations.”

Dr. Chigumbu also emphasizes that life assurers are better positioned to weather economic storms.

“Life assurers have a broader financial base and better capital reserves compared to short-term insurers. This gives them the flexibility to offer more long-term solutions, which is appealing to a population that faces unpredictable financial pressures.”

Robert Muzondo, an insurance broker with decades of experience, believes that the future of funeral assurance in Zimbabwe lies in the hands of life offices.

“Funeral assurers are scrambling to catch up with life offices, but they face an uphill battle. Life assurers offer products with much more security and often at a lower price point, especially when you factor in inflation. What life assurers are doing now, which is offering faster claims and mobile payment solutions, could change the game for good. They are thinking long-term, which is something short-term insurers haven’t been able to do.”

Despite the success life assurers have found in the funeral assurance market, there are challenges ahead.

The rapid expansion of funeral cover raises concerns about sustainability. With the economic volatility in Zimbabwe, ensuring adequate reserves and financial stability will be crucial for life assurers. The risk of undercutting and unsustainable pricing models has also been flagged by industry experts as a potential concern for the long-term health of the sector.

Rufai remains optimistic, noting, “While we are seeing rapid growth in funeral assurance, we have also seen a remarkable improvement in industry standards. Life offices are committed to maintaining strong reserves to ensure that we can meet the demands of our policyholders, even during difficult economic times.”

The Life Offices Association (LOA) of Zimbabwe and its members are paving the way for a new era in Zimbabwe’s funeral assurance sector. With their innovative products, mobile solutions, and focus on customer needs, life assurers are reshaping the insurance landscape and creating more opportunities for financial protection. While challenges remain, particularly around managing claims and ensuring long-term sustainability, the future of funeral assurance in Zimbabwe looks increasingly dominated by life assurers.

As life assurers continue to embrace change and innovation, their leadership in the funeral assurance market will only grow stronger. With the backing of organizations like the LOA and the support of industry experts, life offices are well-positioned to lead Zimbabwe into a new era of accessible, affordable, and reliable funeral cover for all.