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Are Kenyans ready to buy insurance for their funerals?

funeral policy
The introduction of funeral policy marks another milestone for the insurance industry which has lately done much to shed its traditional image as a business that thrives on low-chance events. 

For close to one month now, a billboard has been standing opposite the Nairobi National Park, targeting motorists with a rather queer counsel.

In a society that hardly imagines, discusses or even plans funerals for the living, a promo featuring a tombstone with initials R.I.P (rest in peace) inscribed on it is clearly meant to test the limit of a business.

But the local insurers, the group behind the commercial, are unapologetic as they place bet on the untapped potential of funerals to drive growth. The Association of Kenya Insurers (AKI) has erected the billboard as part of its consumer education campaign.

“Put your funeral costs to rest,” the ad screams out. “With as little as Sh100 per month, you can get a cover worth Sh100,000 to cater for funeral costs and ease the financial burden for your loved ones.”

And whatever is not poignant in the words is aptly conveyed in the choice of the edge of the Langata Cemetery, Nairobi’s biggest burial grounds, as promo’s location.

The insurers say it is an out all battle. When they are not erecting billboards and sharing their morbid promos via FM stations, they are using young people carrying real-size black coffins to deliver the message to target groups through music, dance and drama.

Apparently buoyed by a rapid growth of life insurance premiums that hit Sh83.65bn in 2017 or 13.16 percent increase on the Sh73.92bn collected the previous year, the pursuit of new business lines is increasingly becoming aggressive.

By drawing the public’s attention to the finality of death — and the need to start saving early for related expenses such as mortuary fees, casket, hearse, flowers, funeral programmes and food — the industry hopes to boost its numbers.

So far, 22 out of the 26 firms that wrote life insurance last year have added funeral policy either as a stand-alone product or as part of an existing one (rider).

From APA’s pumzisha to the last expense cover as it is called by firms like Britam, First Assurance and CIC; and from what the Jubilee calls family shield cover to Liberty’s family protector plan, the industry appears to have drawn the lines.

Under the arrangements, policy buyers are supposed to pay premiums monthly, quarterly or annually on a promise that the lumpsum payment will be released for their final resting ceremony within 48 hours of claim.

If successful, the industry could raise its life insurance penetration level beyond the 1.08 percent of the population recorded last year. By comparison, South Africa, the continent’s most insured market recorded a life insurance uptake of 11.02 percent while Namibia had a penetration of 5.37 percent.

“Though picking up, the funeral product still has a long way to go in Kenya,” notes Mr Tom Gitoko, chief executive of CIC Insurance. “But at least, it has so far been embraced by chamas (informal groups) for their members which is a positive thing.”

In a society where funeral expense is always taken as the responsibility of the predeceased family members, AKI’s bid to change the mindsets appears to be a long shot.

Think of a typical Saturday afternoon, and an open ground that once served as a local authority market for Bondo, Siaya County, is fast teeming with people who soon break into smaller meeting groups.

The people from the town’s estates and surrounding villages gather at the open ground to raise money for funerals, hospital bills, weddings, churches and other social causes.

“You only have to pay for the number of plastic seats that your group needs and that’s what counts as the rent for the meeting ground,” a grocer identified as Rasto Onyango once told the Business Daily.

Here in Nairobi, that deeply entrenched cultural bond appears to respect no ethnic boundaries as Kenyans huddle in groups every day after work hours to raise millions of shillings for various causes.

Just a single mention of death and popular spots like the city’s Garden Square Restaurant, leading church grounds and a number of secluded hotels come to mind.

And with advancement in technology, social media platforms such as Facebook and WhatsApp have come in handy, allowing smart phone users to raise money at the touch of a button.

The local insurance industry however maintains its disdain. It wants Kenyans to forget about handouts and adopt a savings culture.

“Just like we saw politicians push for the ban on harambees, the cash that people raise via social networks will soon dry up,” predicts AKI chief executive Tom Gichuhi “There is already a hint of fatigue as only a few people show up for fundraisers these days unless it a really for an urgent case.”

According to Mr Gichuhi, the funeral cover promotional campaigns of the last three weeks have so far triggered a great deal of public interest with product enquiries hitting 165 by phones and more than 100,000 on social media.

“The most peculiar thing about these enquiries is that majority of those making them fall within the productive 20-35 age bracket,” said Mr Gichuhi.

Still on the extreme end game, the industry has to confront a category of people who have chosen to run ahead of the pack, and neither want to save nor expect contribution for their funerals.

Think of Kanyadhiang’ village of Karachuonyo, Homa Bay County, where an empty grave has been waiting for the day the Grim Reaper comes for its digger— a former top judge.

Critics may regard the concrete grave that the 75-year-old widow ordered built to her specifications as an escalation of her eccentricity. That is because the retired judge once went public about her displeasure with certain aspects of the Luo culture.

But she may still influence other people to walk in the footsteps of other prominent Kenyans such as former Butere MP Martin Shikuku who in 2012 was buried in a grave he had dug for himself eight years earlier.

Still, the introduction of funeral policy marks another milestone for the insurance industry which has lately done much to shed its traditional image as a business that thrives on low-chance events.

So far, the general insurance segment has violated the conventional business limits to start writing the risk of political violence, adverse weather and, even terrorist attacks.

Official data however indicates none of these gambles have had a significant impact on the industry’s bottom line. Data compiled by the Insurance Regulatory Authority shows that only the marine segment of the general insurance has since recorded a phenomenal growth in recent months.

The 41.56 growth in marine insurance premium recorded last year is linked to the government’s directive which took effect in April last year compelling importers to buy cargo policy from local firms.

As a result, marine insurance premiums ballooned to Sh3.8bn in the 12 months to December 31, 2017, compared to Sh2.7 billion the previous year.