Businesses & Financial News

Cost of grieving gets costlier as underwriters push up prices of funeral covers

By Steve Umidha

Policyholders are paying more to grieve their loved ones in last expense cover costs than they were last year, our findings can now reveal.

A random sampling shows that more than 90 percent, if not all insurance firms offering such indemnities, have almost doubled their prices in recent months as a cushion to rising costs of living that has been heightened by ‘inflationary pressures.’

“Last year, I paid Sh6, 800 for a group funeral expense insurance in our group where we are 10 of us, today when I got the application form to renew my cover, I was surprised when I noticed the amount had been capped at Sh13, 540 for the same cover,” offered Kevin Obong’o who is a member of 1940 Brothers.

The group – formed in 2010, comprises ten friends who last year took the said annual cover from Liberty Life Kenya, an indemnity that covers the principal member’s nuclear and extended family, one spouse, and up to four biological or adopted children as well as the policy holder’s in-law parents. Such beneficiaries are eligible for up to Sh300, 000 in premiums – payable per member.

Benefits offered under this category by the underwriter ranges between Sh50, 000 whose payable annual premium rate is capped at ShSh2, 325 per member and Sh500, 000 for a Sh22, 100 rate per member.

“Initially we had intended to change the insurer but instead opted against the idea, after we realised all the other firms had also increased their rates for this particular cover, we had to renew it,” offered Obong’o.

A brochure by another underwriter, UAP life group, for a similar class of business for registered groups, also show an increase in its yearly renewable rates as Sh 8, 125 for benefits of up to Sh250, 000 and Sh 16, 250 for premium benefits of Sh500, 000 for nuclear and extended family premium, which is offered as a single claim or per member. Those figures were however lower six months ago.

That amount is however higher in annual renewals for a similar category, although issued to up to six beneficiaries in claim payments.

Also called final expense cover, the funeral insurance, is a whole life policy that helps cover costs of an individual’s final arrangements and pays for expenses such as the memorial service, casket or urn, and burial or cremation costs.

Insurance premiums vary depending on your age, the type of coverage, the amount of coverage, your insurance history, and other factors. Also known as last expense, such a benefit becomes payable to the family of the deceased, assured within 48 hours of receipt of notification of death within the cover period.

But owing to hard economic times, more Kenyans are now adopting non-spectacular funerals that were previously costlier and designed to honor the dead and mollify their spirits.

Such rites are characteristically profligate by any standards depending on the community where the bereaved hails from, with an average funeral costs estimated at a howling Sh100, 000 or more – an exorbitant amount in a country where a civil servant earns an average of Sh24, 000 a month.

As a result, the majority of Kenyan households are now opting for slimmed-down rates for such protections with supervisory bodies like the Insurance Regulatory Authority (IRA) –who are tasked with controlling such predatory practices, conceding to being powerless in rescuing the now startled consumer.

“It is a free market, a blanket market really, where underwriters are open to extend their services and products to willing buyers. These are tough economic times and the industry is feeling the heat as well. But policyholders have options of cheaper insurers,” commented an employee of the IRA who requested privacy.

Indeed, the ongoing concerns were first sounded in February this year when industry observers warned of a sharp increase in premiums in the post pandemic year as insurers try to adjust to years of underpricing their products.

Predictions by Cytonn investments and the Association of Kenya Insurers (AKI) anticipated at the time that industry malpractice among players would escalate this year as insurers rushed to make up for losses they paid in claims when the pandemic unsettled their profit margins.

 

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