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Burial Societies – The Collapse Risks

Burial Societies – The Collapse Risks
Written by Tose Gava

Friday 19 May 2017 11:20

BURIAL Societies are a phenomenon
gripping the diaspora communities right now. Advancing age,
overworking, bad eating habits, accidents are all factors worsening the
diaspora mortality rates.

A burial society is a form of not-for-profit friendly society or
mutual scheme. Needless to say, burial societies should not be formed
for personal gain of the founders. Sadly, some founders treat burial
societies as personal property or projects.

Diasporans are global villagers or transnational citizens who belong
to more than one society and that makes diaspora death not only very
expensive but complex especially where repatriation is
involved. Generally speaking diaspora death can be defined as a
situation where one dies abroad but allow me to broaden the definition
to include a situation where a Diasporan loses a close relative back
home. Both scenarios financially complicates the send-off process.

As Diasporans face-up to the harsh reality of death they naturally
have to come up with ways of managing the risks. Besides formal
insurance schemes like the Diaspora Funeral Cash Plan,
a good number of Diasporans have come together to form burial societies
which is commendable but largely an informal response to a common
social ill.

In this blog I want to look at the background and essence of burial
societies. Why is it that burial societies rarely span generations? What
are the collapse risks of burial societies? Can burial societies be a
long-term or intergenerational solution to family protection needs or
are just a stopgap measure? How can burial societies enhance
paternalistic values to their membership? Can burial societies transfer
the pay-out risks without destabilising the communal spirit that binds
the group?

Is it right to treat your church as a de facto burial society? The
uncomfortable truth is that there are quite a number of people who treat
their church as their burial society.

As a financial adviser, I am motivated to make this contribution by
my recent encounter with one female Diasporan who was part of a burial
society. Hell hath no fury like a woman conned. Apparently she belonged
to a burial society group which had over 200 members and everything has
gone sour. She lamented, ‘…I didn’t realise I had joined a group run by a
crook, who was raised as a crook by crooks…’ The members have since
taken the collapsed/collapsing burial society founders/administrators to
court.

Burial societies were historically constituted for the purpose of
providing, by way of voluntary subscriptions, for the funeral expenses
of the husband, wife or child of a member, or of the widow of a deceased
member. Jewish communities often have a burial society known as the
chevra kadisha, which also covers performing the necessary Jewish
funerary rituals and ceremonies. In ancient Greece and Rome, various
associations of a fraternal nature, as well as religious groups,
political clubs, and trade guilds functioned as burial societies.

Edmund Roberts mentioned the European and Burial Society when he
visited Cape Town, South Africa in 1833. The society was founded in 1795
by Dutch settlers. He described it as “supporting poor and unfortunate
fellow-countrymen, during their illness, and in the event of their
death, to cause them to be respectfully interred.”

In low-income suburbs like Chitungwiza, a dormitory town about 30km
south of the Zimbabwean capital Harare, burial societies have long
played an important role in helping their members meet the costs of
burying family members.

Traditionally, burial societies in sub-Sahara Africa have functioned
as a means of informal insurance for low-income earners who rarely
qualify for insurance policies and would otherwise struggle to afford
the high cost of a funeral. “The majority of the people who belong to
burial societies are poor and unemployed. They don’t qualify for
insurance policies because they are not in formal employment,” once said
John Robertson, an economic consultant.

When does it make perfect sense to be a member of a burial society?
Suffice to say I do not know of any burial societies in leafy suburbs
like Borrowdale or Sandton but there is certainly an innumerable number
in places like Mbare, Makokoba, Soweto you name it. Most Diasporans can
afford to have individual insurance policies but for some reason remain
trapped in the idea of communal co-existence. Unfortunately, members of
burial societies do not always have full control of their
personal/family protection needs as it becomes an issue of reciprocity.
If you can afford to independently protect your family, why pool
resources?

The raison d’être of a burial society is to provide for the cost of a
funeral and they are formed and structured to pool meagre resources
together. Burial societies are essentially mutual assistance scheme
wherein members share their risks by pooling resources together which
creates a sense of security and peace of mind. Agreeably, burial
societies sometimes function as extended family offering moral,
emotional, financial, material support in times of need.

Traditional burial societies are either pre-funded, collecting or
hybrid. Pre-funded ones operate a buffer fund which they use to help
bereaved members whereas collecting ones normally do one-off collections
from members as and when funds are a needed. Hybrid burial societies do
both, that is, ongoing building of a buffer fund and collections to
raise funds needed in case of bereavement.

By their nature burial societies stand or fall on their ability to
achieve reciprocity between members. Failure to reciprocate is the
biggest collapse risk that bury burial societies worldwide.

In many cases burial societies help the first beneficiaries and this
is largely because over the medium to long-term they are susceptible to
so many collapse risks. If one is a member or administrator of a burial
society there is a host of risks that one needs to confront and make
sure that the impact is mitigated.

In no particular order, below are some of the key collapse risks that
most burial societies face. The impact of each identified risk depends
on the set up of the burial society and the economic well-being of its
members.

Failure Of Reciprocity Risk – this a by far the
ultimate risk that many burial societies face and can be a culmination
of many other risks herein discussed. Failure of reciprocity happens
when due to number of factors the burial society fails to pay agreed
benefits to new claimants who have previously contributed to help
others. Because burial societies are mutual assistance schemes
reciprocity is at the core of their survival and continuity.

Insufficient Benefits Risk – most burial societies
especially in the diaspora do not have capacity to give the full amounts
required to cover all costs relating to diaspora deaths especially if
you talk of body repatriation, prolonged funeral vigils, family travel
and the cost of burial in the home country. This means that the burial
society may not fully address the financial needs of the bereaved
members.

Administrative Inefficiency Risk – this normally
manifests because most burial societies are run on voluntary basis
without dedicated service delivery capacity. The administrators may not
have any training in admin and customer service as well.

Non-payment Of Contributions Risk – I once spoke to some
members of a burial society in USA and there was some tangible anger in
the manner some of the members were taking advantage of the community’s
goodwill. Some members never pay their contributions on time but the
worst case was of a member who lost a spouse and was supported with all
the costs including repatriation and family travel only to cut ties with
burial society after burial. Understandably, in poorer communities it
may well be the case that members simply can’t afford the monthly
subscriptions. There are also people who are not financially settled in
the diaspora and may struggle to pay the agreed subscriptions.

Escalation Of Funeral Costs Risk – over time escalation
of funeral costs may render agreed benefits meaningless which would
result in membership disengagement and withdrawal.

Increasing/High Mortality Risk – all burial societies
face increasing mortality over time as the members begin to get older
and older. Increasing mortality negatively affects the buffer fund
created and also impacts negatively on the contributions inflow. If a
family who are members of a burial society were to suffer a fatal
accident which results in a multiple claims the fund may be depleted
which could demoralise the surviving membership.

Fraudulent Claims Risk – this is a big risk which is
fueled by lack of tight claims validation procedures. In some burial
societies there seems to be a claims competition. Most of the time
claims are paid on trust and some bad apples may take it a loophole to
swindle the scheme. Sadly some dubious scheme administrators may also
throw in fraudulent claims of their own.

Mis-use Of Moneys Risk – due to poor checks and
balances some burial society administrators actually swindle or misuse
people’s funds. The sad thing with some burial societies is that some
founders treat them as personal property which consequently results in
abuse of funds.

Wrong Investment Decisions Risk – this risk arises when
the burial society leadership get excited that the buffer fund has
grown and start trying to invest the money. It may be a genuine attempt
to invest and grow the fund but not all investments work out.

Dynamics Of Migration Risk – with most diaspora burial
societies migration can be a factor. If the driver of the scheme was to
relocate its naturally becomes very difficult to co-ordinate things.
Equally some members may relocate and feel that they can’t continue with
their membership.

Aging Leadership Risk – over time it may happen that
the founders are aging and may not have the same energy and enthusiasm
to keep the scheme going. Unless there are younger members taking over
leadership (if founders allow them) then the burial society may just die
a natural death

Intergenerational Perception Risk – it is a sad fact of
life that perception and needs change from generation to generation.
Whereas first generation migrants may have a fixation about repatriation
sadly the same may not be said of subsequent generations. This is one
reason why some diaspora burial societies never span generations.

Faced with all these risks one has to do the due diligence in terms
of the sustainability of burial society as family cover in the long
term? Can you comfortably cover your young children through a burial
society? What are the chances that your young family may actually
outlive the burial society?

Unless burial societies are able to transform to create paternalistic
values that guarantee reciprocity they will always face huge collapse
risks. In my view, the best way to create lasting and intergenerational
values in burial societies is to transfer the underlying claims risk to
an insurance company and this can be done by joining a group funeral
cash pan. This way the burial society stops to carry the pay-out risk
but can continue to exist and function in every sense as a mutual scheme
or call it extended family. Under the group scheme the burial society
is insured as a group and when a member dies the benefit is paid out by
the insurer not from the burial society’s buffer fund or collections.

On schemes like the Diaspora Funeral Cash Plan group cover
members can be covered for the correct cover amounts. Members are also
permanently covered in US$s and the cover is offered on guaranteed
acceptance, completely no medicals, basis. Pay-out is guaranteed within
24hrs of proof of death. The fact that the cover is cash based means
it’s a protection without borders and body repatriation is not
mandatory. Free cover after twenty years also means that if one adds
children they will continue to enjoy the cover long after the parents
are gone and this helps to keep the group together.

If you belong to a burial society it’s better to start asking the
hard questions now than to gamble with your family protection needs.
There two options I am happy to recommend; that the whole burial society
transforms into a group scheme underwritten by an insurance company or
individual members take personal insurance plans so as to have correct
and adequate covers. The burial society cover can be complementary or
supplementary. With individual insurance covers each family controls its
fete rather than relying a community intervention or group reciprocity.

leslyicdigitalBurial Societies – The Collapse Risks