Market News

Study proposes cashback model for funeral cover


Association of Kenya Insurers (AKI) executive director Tom Gichuhi. FILE PHOTO | NMG

Insurance companies can spur uptake of funeral insurance if they introduce a guaranteed partial cashback scheme in the event no death occurs at the policy’s maturity, a new report suggests.

A study by Ipsos Synovate commissioned by Association of Kenya Insurers (AKI) on 10 focal groups in Nairobi, Mombasa, Kisumu, Nyeri, Kajiado and Eldoret found refund of a specified percentage of the premiums could help change the perception of funeral cover as a ‘loss’ cover, into a funeral expenses-cum-savings product.

“The funeral policy should have a compensation/cashback plan and a reward system for everyone who takes up funeral cover with the minimum payment in case of death set at Sh300,000,” it said.

The study observed only three per cent of Kenyans have some form of funeral insurance cover with most clients being from western Kenya. The rest relied on burial committees and goodwill from employers to fund funerals.

AKI executive director Tom Gichuhi said funeral covers help cater for coffin, transport and food expenses, which were identified as the costly items that drain families.

The study urges insurance companies to increase sales agents in western Kenya where uptake is highest.

The region’s male-dominated welfare groups were identified as the most viable target for the drive since funeral ceremonies are communal, lavish and costly rituals where bereaved families go into overdrive to reaffirm their ability to give their departed ones an ‘honourable’ sendoff.

Muslim communities spent the lowest at Sh10,000 due to fast-tracked processes towards interment of the dead with other communities spending between Sh50,000 to Sh300,000.

Where an ailing relative incur hefty hospital bills, insurance packages should provide between Sh400,000 and Sh2.5 million to ease the pain families go through when raising funds to clear the bills.

“While many families rely on goodwill contributions and welfare associations to fund funeral expenses, some ‘topped’ up with loans taken from banks, saccos and shylocks,” the study observed.