A regulatory review of formal and informal funeral insurance market in South Africa


The provision of funeral cover is, if informal provision is included, both one of the most widely used financial services in South Africa and one of the most neglected. Recently, concern has grown about possible abuses in the provision of funeral cover, with several submissions made to the Parliamentary Committee on Finance in December 2003 suggesting wide scale abuse and fraudulent practices in the sector. Funeral cover in South Africa is a product targeted at lower-income households, a segment of the population characterised by low levels of financial literacy and thus vulnerable to abuse. In addition, a large proportion of provision of funeral cover is effectively unregulated, including the ubiquitous burial societies and funeral parlours. This report was commissioned to analyse the market dynamics, ascertain the nature and extent of the abuses and recommend an appropriate regulatory framework. The focus was particularly on Black consumers, as they comprise the bulk of the clients in this market. The authors found that the demand for funeral insurance and related services is driven by a deeply felt need in Black society for the deceased to be accorded a dignified funeral. Unlike most other insurance products, funeral insurance is bought, not sold. In fact, urban clients often contract with multiple providers to ensure a funeral of an appropriate standard.






Hennie Bester, Doubell Chamberlain, Ryan Short, Richard Walker

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