Omega Ukama 
ZIMBABWEAN funeral assurers’ profits decreased by 70,63 percent to $0,58 million during the first quarter of 2019, despite recording a marginal increase in business as operating costs weighed down operations, the industry regulator has reported.
In its Funeral Assurance Industry report for the first quarter of 2019, the Insurance and Pensions Commission (IPEC) said the sectors operating expenses were up to $5,90 million from $4,46 million while claims increased from $3,14 million to $4,10 million.
“Operational and management expenses remained comparatively high in absolute terms to claims incurred on policies.
“There is need for the industry to better understand the trends that have been observed where expenses are concerned,” read the report.
Operating costs and commissions remain relatively high when compared to claims, accounting for 62,49 percent of total costs.
“The high costs will not be sustainable in the long run given that the nature of the business is more long-term and additional pressure from cashback policies being underwritten,” IPEC warned.
“Accordingly, the industry will not be able to sustain such high-cost structures should they be faced with a change in claims experience,” the regulated added.
Gross Premium Written (GPW) by the nine registered funeral assurance industry players increased marginally by 6,87 percent during the period under review, from $10,39 million for the period ended 31 March 2018 to $11,11 million.
“The increase in GPW was attributed to an increase in new business that was written within the individual life and corporate business space, as people and corporates strive to provide a decent burial for their loved ones and employees respectively,” IPEC said.
The adoption of funeral assurance policies in the country has grown over the years, setting the sub-sector apart from the rest of the insurance industry, which has been struggling to encourage the uptake of its offerings.
According to the report IPEC added that insurance penetration in Zimbabwe is currently below two percent.
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