A century of excellent service
The funeral & insurance service provider thanks loyal clients with rewards
Growth is imminent at AVBOB, the funeral undertaking and insurance provider that launched its centennial celebrations this week.
This period is significant for AVBOB as it coincides with centennial birthday commerations of another SA icon, former president Nelson Mandela, who AVBOB had the honour of being selected to bury following his passing in 2013, as well as struggle activist Albertina Sisulu.
In its 100th year the Pretoria-based company is preparing to shift up a gear by adding another 100 branches, rolling out special bonus payouts worth R3.5bn to members as well as implementing technology that will help it chart a new path in the domestic funeral industry.
AVBOB CEO Frik Rademan said this week the expansion would unfold over the next 18 months and mainly into areas that were previously underserved and where the company may find opportunities to create new employment. AVBOB currently employs close to 8,000 people across a network of 320 branches in SA, with a smaller operation in Namibia.
Rademan said, “AVBOB’s business model has enabled us to empower entrepreneurs to become self-sustaining business people who employ their own staff. In addition to the direct creation of employment, these entrepreneurs acquire products and services from other suppliers and service providers of their choice within their local communities.” The company provides supporting infrastructure and enables the representative to appoint staff. The staff complement has doubled over the past seven years in a booming industry where banks, cellphone companies and retailers have appeared on the fringes to offer funeral insurance as they too aim for a slice of the sector.
There are an estimated 15m funeral policyholders in SA, according to April data from Old Mutual. The Association for Savings and Investment SA said 5.6m risk policies, which include life policies, disability cover and funeral policies, worth R12.6bn were subcribed for last year.
AVBOB has over 1.9m policyholders and insures more than 5.9m lives.
Rademan said the R3.5bn special bonus — accrued from surplus profits — will be paid into AVBOB Reward Accounts created for each policyholder. ‘‘Our intention in the future is that all further declarations will go into that account,’’ he said.
The payout will be credited to the new AVBOB Reward Accounts from September 1 2018.
The benefit per policy ranges from R1,000 to R50,000, depending on how long the policy has been active and the age of the policyholder.
“During the first year after the announcement we estimate that we are going to pay out approximately R600m to people who have already turned 65 with policies that have been in force for 10 years or more,” Rademan said.
Members will be able to claim the cash after the main insured member reaches the age of 65. But the policy has to have been active for 10 years, according to Rademan.
If the main member passes away before reaching 65, the full amount in the AVBOB Reward Account will be paid out.
“They can use it for whatever they want. If they don’t want to use the money they can reinvest it into a Savings Account with AVBOB or leave it in the ARA where further future bonuses can accumulate. That’s why we call it sharing in the long-term success of the group. That’s totally unique for a funeral policy. We are a mutual. We have got no shareholders who demand dividends, so we pay it over to our members,’’ he added.
The company is exploring new technology which can replace conventional flamebased cremations: alkaline hydrolysis.
‘‘We want to be the first in SA to do that. We struggled a little bit to get authorisation to go on, but we’ve ordered two machines and hopefully we’ll put that in place within the next nine months. So, we are very innovative ... we want to do things differently.’’
Launched on August 15 1918, AVBOB traces its roots to the arrival of the deadly Spanish flu in SA, which came with soldiers returning from World War 1 in 1918. As the death toll climbed, makeshift mass graves popped up everywhere amid poverty and disease-stricken communities. A school headmaster, Hendrikus van Rooijen, decided to create a burial society with a vision of providing a dignified funeral at an affordable price.
The company runs three divisions offering insurance, funeral services and manufacturing of coffins, tombstones and other funeralware. Rademan is confident about growth despite fierce competition.
“What makes us different is our competitive advantage — that’s our mutual status. We can give additional benefits to our policyholders. That makes us unique.”
The special bonus is independent of other funeral benefits already offered with a policy that is opened with AVBOB. The free basic funeral is currently worth R11,000 and includes undertaking services, the use of AVBOB mortuary facilities, free transport of the deceased within the borders of SA, the use of a hearse, a basic coffin, graveside equipment and administrative assistance to obtain necessary documentation. These free funeral benefits apply if AVBOB conducts the funeral.
In addition to the free basic funeral benefits, policyholders also receive R2,500 cash upfront to the person arranging the funeral for urgent needs such as groceries, airtime, electricity and other requirements ahead of the funeral. These benefits are re-evaluated annually to mitigate inflationary pressures.
Bonus allocation worth R3.5bn, organic growth and new technology