Financial Regulators Begin Overhaul of Funeral Insurance in SA

South Africa's financial regulators have started a comprehensive review of the legal framework governing funeral insurance in South Africa.

- Liesl Peyper

The Financial Sector Conduct Authority (FSCA) and the Prudential Authority note in a statement that the regulatory review is in response to increasing concerns among authorities and funeral parlour industry representatives about the effectiveness and appropriateness of the current regulations.

SA's funeral insurance sector is valued at between R15 billion and R20 billion annually.

According to the June 2024 statistics from the Association for Savings and Investment South Africa (Asisa), 15 million of the 35.2 million risk policies in the country were funeral products.

Although there is a regulatory framework in place, there are several illegal and unscrupulous operators in the market. Funeral claims and misrepresentation of funeral policies count among the highest incidences of insurance fraud in the country.

Asisa's latest available statistics show that last year, there were 2 561 incidents of funeral claims fraud, involving 503 clients and 1 953 policies.

This represented a loss of close to R22 million. The province with the highest incidence of funeral claim fraud was KwaZulu-Natal with 742 incidents.