Report: African Funeral Insurance A Lucrative Opportunity

Report: African Funeral Insurance A Lucrative Opportunity

Funerals throughout Africa can be lavish affairs, providing a lucrative opportunity for insurance companies looking for business in some of the world’s fastest growing economies, Reuters reports.

Most of the insurance industry’s big-money makers in developed countries – like auto and homeowners’ insurance – are irrelevant to the majority of Africans who can’t afford those expensive personal possessions, the report said.

But high death rates and low savings in Africa mean funeral insurance is proving an easier sell among people daunted by the price of ceremonies that can cost several months of income.

Funeral insurance premiums in South Africa totaled about $494 million in 2011, according to Jacky Huma, head of micro insurance at the South Africa Financial Services Board.

Emily Chauke, a 43-year-old cosmetics consultant from Johannesburg, pays $64 a month for family funeral insurance.

In South Africa, the continent’s biggest economy, the death rate is more than 17 per 1,000 people a year – almost double the global average. Six of the world’s 10 countries with the highest death rate are in Africa, according to the CIA World Factbook.

While mortality rates are high, though, they are also falling – an attractive combination for insurers which raises the prospect of customers paying longer into their policies.

While that’s less than 2 percent of all long-term insurance in the comparatively developed South African market, she said demand is growing rapidly, a point echoed by global bank Standard Chartered, which said burial coverage is also a crucial way of winning new customers in less developed markets.

lobal financial services firms see funeral insurance as a way to get a foothold in many African markets, but they will find plenty of local competition.

Uganda’s A-Plus Funeral claims the $2 million local funeral insurance industry is growing 25 percent a year.