400 000

CityPress - - Business -

“The fund will not sell risk or make a profit. It will sim­ply seek to cover the ex­pected pay­outs,” said Van Vrede. “Pri­vate in­sur­ers ex­ag­ger­ate risk any­way,” he added. The depart­ment ex­pects to pay out R1.5 bil­lion in ben­e­fits per year, in­di­cat­ing 150 000 deaths. Ac­cord­ing to Van Vrede, most in­sur­ers in the grant ben­e­fi­ciary mar­ket sim­ply charge the max­i­mum 10%. This amounts to R150 a month for a sim­i­lar ben­e­fit to what the depart­ment pro­poses, amount­ing to about R10 000. “There is huge money in it for in­dus­try, but that is to the detri­ment of ben­e­fi­cia­ries,” said Van Vrede. “There is a strong need for funeral ben­e­fits in that mar­ket – and there is a need for gov­ern­ment to in­ter­vene. “I wouldn’t call it a mar­ket fail­ure, but it is hugely ex­pen­sive and not all that ben­e­fi­cial.” Peo­ple will still be free to buy ad­di­tional cover once they get their grants, but these amend­ments will re­sult in the in­sur­ance in­dus­try be­ing judged ac­cord­ing to the state’s pric­ing, done on a not-for-profit ba­sis. The bill is cur­rently out for pub­lic com­ment and the in­dus­try’s ma­jor play­ers are not pre­pared to say any­thing about it yet. San­lam, which makes use of the reg­u­la­tion 26(a) de­duc­tions through its sub­sidiary, Chan­nel Life, de­clined to com­ment. Lau­rence Hill­man, CEO of Te­lesure In­vest­ment Hold­ings sub­sidiary 1 Life, said they “are en­gag­ing to un­der­stand their [gov­ern­ment’s] think­ing”. “We do not know enough about the pro­pos­als yet. We cer­tainly don’t charge too much; our rates are fair and we pro­vide great value,” said Hill­man. Like­wise, Lion of Africa CEO Paul Myeza told City Press he did not want to com­ment. Ear­lier this year, Lion of Africa chal­lenged the depart­ment in court over its sell­ing of funeral in­sur­ance to child grant ben­e­fi­cia­ries.

Should the gov­ern­ment be get­ting in­volved in the lo­cal funeral busi­ness? ON­GO­ING BAT­TLE

The con­tentious de­duc­tion mech­a­nism cre­ated by

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