THE Zimbabwe Association of Funeral Assurers (Zafa) is seeking an extension of the deadline to meet the new capital requirements set for the sector.
Zafa president Edward Gomba said they are seeking a deadline extension, adding its members are struggling to raise the capital requirements.
Companies in the funeral assurance sector are required to have a minimum capital of US$1,5 million by June 30 this year.
“The sector is struggling to meet the new minimum capital requirements hence our appeal for an extension as what happened with the banking sector which was given 2020 as their deadline,” Gomba told businessdigest.
He said the liquidity crunch which has paralysed the economy has had several adverse effects on the sector. These include increased default rates on premiums by policyholders, lapse of policies due to non payment, slow growth in new business as well as failure by players in the sector to acquire adequate operating assets due to depressed cash flows.
Despite the problems in the industry, Gomba said the Insurance and Pension Commission (Ipec) has noted a 40% growth in the sector in 2013, according to the commission’s report.
Gomba said the outlook for the sector depends on the performance of various sectors of the economy such as agriculture and mining.
“Being a service industry, the sector depends so much on the performance of other economic sectors such as manufacturing, mining, agriculture, banking and even the informal sector for its prem-iums which are the source of revenue for this industry,” he said.
“Assuming that capacity utilisation will improve in these sectors, this will automatically feed into the funeral assurance sector which will also grow. However the reverse will also be very true.”
Gomba said there was a need for unity of purpose with government working together with various stakeholders towards improving the parlous state of the economy.