Tax funeral policy premiums — Zafa

HARARE - Zimbabwe's funeral service industry says government should make policy premiums qualify for tax credit in an effort to increase the uptake of funeral cover by the public.

Solomon Chikanda, the Zimbabwe Association of Funeral Assurers (Zafa) president, said there is need for government to support the uptake of funeral policies.

“In an effort to increase the uptake of funeral cover by the public, the industry is kindly proposing to the ministry of Finance… through the Insurance and Pensions Commission (Ipec) that funeral policy premiums be tax deductible or qualify for a tax credit in the hands of the individual tax payer in the same way that medical aid contributions are treated,” he said at the 2018 Funeral Assurance and Services conference in Bulawayo.

This comes as the funeral assurance industry continues to grow as total assets went up 14 percent to $70,17 million during the year ended December 31, 2017 compared to $61,79 million reported in the previous comparable period.

According to Ipec, the funeral assurance industry premium income advanced four percent to $39,98 million compared to 38,61 million reported in the previous review period.

Chikanda said funeral assurance industry members remain determined to structure products that are both affordable and accessible to low-income earners.

He said there has been abuse of funeral policies by some members of the public hence the need for assurers to ensure that the nature of the business is not a temptation to fraud.

“We have also noted with concern the abuse of funeral policies or funeral cash plans to make fraudulent claims by some unscrupulous members of the public,” Chikanda said.

“It is therefore critical that as assurers we do a serious self-introspect of both our products and systems to ensure that the nature and structure of some of our products does not pose as a temptation to the penetration of funeral assurance fraud we are witnessing.”

Chikanda said this year’s theme “Building businesses and serving communities with passion” is meant to challenge all funeral practitioners that engaging in the funeral business is far much beyond profit or financial benefit but brings much more important roles that are the social and moral obligations.

“These obligations mean that funeral assurers and funeral services industry is duty bound to ensure that our society gets decent and dignified burials when our clients pass on,” he said.

The Vineyard managing director also indicated that funeral assurers will continue to comply with prescribed assets requirements and support government’s projects and efforts in sustaining the economy.

Funeral assurance companies are required by the law to invest at least 7,5 percent of their assets in prescribed assets.

“We have also taken note of the need to raise our minimum capital to the new levels as prescribed. However, the liquidity and other economic challenges currently in the economy may slow down our pace as we strive to meet the set deadlines,” Chikanda said.

He said strategic relationships and networks are necessary to sustain operations in the funeral industry.

The conference is attended by stakeholders from USA, Canada, Botswana, South Africa and Kenya.

— The Financial Gazette

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