Regulator IPEC to redesign Nyaradzo funeral policies after uproar

The Insurance and Pensions Commission (IPEC), the regulator of insurance and pensions business in Zimbabwe is redesigning polices at Nyaradzo Group of Companies after customers raised grievances regarding the funeral assurance’s policy structure.

This comes after Alister Nyamarai Chibanda, a Twitter user, accused Nyaradzo of being fraudulent in their policies. Her position sparked debate since last week prompting IPEC to intervene.

Chibanda among other Nyaradzo clients accused the organisation of ripping off its clients by revoking policies if the assured fails to pay subscriptions for three months when they will have been paying them consistently for three decades.

Others claim that Nyaradzo’s funeral policies were a scam in their present form because they never mature or pay their holders any cash back.

Accordingly, IPEC said there was a need for changes to the product design and broader industry reform.

“The Insurance and Pensions Commission (IPEC) has taken note of ongoing discussions on social media, regarding funeral assurance products and pricing in Zimbabwe,” read the statement.

“IPEC acknowledges the concerns that have been raised by the public on the matter and wish to advise that prior to the current discussions on the matter, IPEC, in line with its mandate of protecting the interests of policyholders, was already in engagement with funeral assurers through their association Zimbabwe Association of Funeral Assurers (ZAFA) on these and other issues.

“These engagements, which also centre around product design and pricing, are expected to culminate in reforms that will ensure the vibrancy and sustainability of the sector and the protection of policyholder interests.

“IPEC will update stakeholders on the progress regarding this exercise.”

Before the regulator’s intervention, Phillip Mataranyika, the co-founder and CEO of the Nyaradzo Group of Companies, issued a statement defending his company.

Writing on social media, Mataranyika said that some clients gained more value than they would have spent in premiums.

“Over the years, we have had policies that mature and could cover only principal members. Because we are an organisation that cares and understands the African and Zimbabwean culture we introduced a new generation of policies that were flexible and affordable.

“The first of those policies was the six pack whose highest premium for all six is US$57. Because clients saw value in a policy transaction that covered six members of the family including parents from both sides, they opted out of the traditional policies that matured and migrated to the six pack plan.

“The traditional policies almost died as less and less people signed up for them, but we have kept them on our books. Let me take this opportunity to work out the possible scenarios,” he said.

“With our six pack plan, which covers six people of any age, the highest premium is US$57 per month.

Let’s work it out together so you see what this means. $57×12=$684. Multiply that by say 20 years that is $13680

“Now among those that can be covered under the six pack plan are parents of both spouses, four of them who may all be above the age of 70 and may die within the twenty year period.”

He added: “Assuming the cost of funeral services of each is about US$10000. Multiply that by 4 that gives you US$40000 and you still have the husband and wife to go. Assuming they both die within the twenty year period, the cost of service provision goes up to US$60000.

“Even if you say the cost of service provision for each of them is US$5000 the total cost of service provision for all is US$30000 in the event they die within the twenty year period which is a possibility.

“That is still more than double the total premium of twenty years. Tell me why anyone thinks we are out to give clients a raw deal.

“Even if we work it out at US$4000 per person, the cost of service provision at US$24000 for all four is still more than the total premiums paid.

“Remember also that children of the principal member are covered for free and could also die as death doesn’t come only to the aged,” Mataranyika added.

A financial consultant who spoke to Nehanda Radio explained what he felt was playing out;

“There are several fundamental issues faced by traditional funeral insurance like Nyaradzo right now. Traditional funeral plans offer goods and services to policyholders on claim. The proposition is outdated and very rigid.

“What has made the traditional funeral policies largely acceptable in developed markets like UK is the fact that a policyholder buys a fixed value policy so basically pre-funds the funeral. The policyholder does not have to pay premiums for life.

“With the likes of Nyaradzo, a policyholder has to pay premiums for life and that creates a problem. Far too many clients end up paying way more than what they will benefit and that is not treating customers fairly.

“The other issue is that a policyholder can only get the ‘goods and services’ from the one funeral director who is the policy-provider. This means that the policy is very rigid and given that policyholder may relocate out of territory.

“Policyholders can also change their preferences like opting for cremation and that would result in loss of benefits.

“Also, by locking policyholders to a single provider, it means that even if their services standards have deteriorated to very poor and the goods are outdated the policyholder has no choice.

“Policyholders are also caught in ‘top-up’ trickery by funeral directors where it ends up being as bad as buying a new policy. Top-ups are prevalent because a policyholder is exposed by the fact that the value of what they bought is not certain or guaranteed over the years and the goods may be outdated.

“Assume and compare two policyholders who may have bought their policies in say 1990 – client A bought an executive package and client B bought a US$10,000 policy. Fast forward to say 2025 and bought claim, who is likely to get a fair value on their policy?

“The first one is like to be asked to to-up this and that but the later one has clear value benefit and can claim cash, pay the best provider wherever they maybe in the world to get a dignified send-off. Certainty and measurability of the value being bought on a policy is very important for trust,” he consultant told Nehanda Radio.