Despite low uptake, funeral cover can’t be buried away

“When were you last prepared for an accident?” poses APA Insurance on a giant billboard along Jogoo Road, one of Nairobi’s busiest arteries.

Despite data from the National Transport Safety Authority putting death toll as a result of accidents at 2,453- or an average of eight per day- between January and October 18, 2018, penetration of insurance product stands at just 2.83 per cent in a country of over 46 million people.

But road accidents are not the only cause of death. About 189,089 Kenyans died in 2017, according to data from Civil Registration Office. Pneumonia, malaria and cancer were the leading culprits, with 22 per cent of deaths being from pneumonia.

Bad omen

And with African culture solidly united against death, discussion on preparing for death is no go area lest one invites a bad omen in form of the grim reaper.

“Are you sure somebody is not going to kill me knowing that I have a funeral cover?” asked Gisemba Nyatwori on Twitter on the day Insurance Association expenses. Incidences of bodies stuck in morgues over unpaid bills are on arise.

In January, a family in Ol Kalou, Nyandarua County reported that it was unable to bury their mother more than a year after she passed on due to a Sh2 million hospital bill.

In some cases, family members borrow money from banks or Shylocks to cover funeral costs while others use Title Deeds as collateral to get their dead discharged from mortuary.

It is with such mix of statistics in mind that Kenyan insurance firms are attempting to cut through complexities presented by culture and low income levels to offer funeral insurance.

AKI Executive Director Tom Gichuhi says the industry wants to target contributors with premiums of as low as Sh100 per month to help alleviate families from financial strain that comes with funerals.

“Culture is a good thing. However, we live in different times and the reality is that it is becoming increasingly difficult to fundraise for funerals. We aim to start conversations about how we can ease the burdens to families when it comes to funerals” says Mr Gichuhi.

Firms such as Canon, Old Mutual, Madison, APA, Sanlam, Britam, KCB and CIC have all rolled out insurance products to lessen the pain of grieving through contributions of as little as Sh250 per year.

The uptake is still low but showing growth. This is getting the attention of religious organisations, confirming the growing place of need for financial management and connecting with the realities of life despite strong faith.

In Nairobi’s Embakasi area sits Gospel Centres International (GCI) church with a congregation of over 3,000 people. The church has partnered with First Assurance Ltd where members pay either Sh250 per year or Sh500 per year to guarantee them Sh50,000 or Sh100,000 respectively in case of death.

Financial pain

This is paid once a year and covers spouses and children, alleviating the financial pain that comes with losing one’s kin.

“The church encourages all members to sign up. We have seen gradual growth in uptake as Christianity helps overcome the barriers associated with funeral cover,” said Maina Mungai, an administrator at GCI.

This is a great deal given the enormous expenses that usually accompany funerals. An AKI report carried out by research firm, Ipsos Limited, puts funeral budget at between Sh50,000 and Sh300,000 for an average middle class home.

For cases where the person died of an illness and left a hospital bill, the March 2018 study titled ‘Unearthing value proposition for funeral insurance’ puts the cost at between Sh400,000 and Sh2.5 million.

“There is an opportunity arising to offer a solution for death and burial arrangements based on changing dynamics in the market. Death has become the second main household risk factor after drought and as a result funeral preparations are becoming increasingly important,” says the study.

Going by Civil Registration Office data, a simple assumption that all the 189,089 people who died last year spent Sh50,000 on burial, total funeral cost translates to Sh9.45 billion- money enough to fund the combined budgets of Elgeyo Marakwet and Tharaka Nithi counties. Only 11 out of 47 counties have budgets above Sh9.45 billion in 2018/2019 budget.

APA Insurance runs pumzisha cover where members contribute an average of Sh2,000 monthly and get access to Sh500,000 within 48 hours in case of death. This covers expenses such as mortuary fees, the cost of a casket, hearse, flowers, funeral programmes and refreshments.

“The cover allows you to include all members of your nuclear family together with your parents and parents-in-law and provide peace of mind,” says the insurer.