DUDU RAMELA: The National Funeral Practitioners Association of South Africa, also known as Nafupa, is accusing insurance companies of unscrupulous underwriting practices. Nafupa alleges that insurance companies are invading the funeral industry, leading to a number of black-owned funeral parlours losing their companies to these insurance giants. They’ve accused Old Mutual of swallowing undertakers they have underwritten.
We speak now to old Mutual’s MD for Mass and Foundation Cluster, Clarence Nethengwe. And, just to note, Nafupa’s Muzi Hlengwa is also meant to join us for this discussion, but unfortunately his phone keeps going to voicemail. But we are still going to try and get hold of him so that they can give us their version of events.
For now, though, let’s speak to Mr Nethengwe. A very good evening to you. Thank you very much for joining us, sir, this evening.
CLARENCE NETHENGWE: And thank you, Dudu, for inviting me to your programme.
DUDU RAMELA: [Corrected] Old Mutual has been accused of trying to swallow up these funeral parlours in a very strongly worded statement from Nafupa. Your response to this?
CLARENCE NETHENGWE: Let me just put that into context. That is not true. First of all, Old Mutual has over six million customers in South Africa, and about 3.4 million of those hold funeral policies. Over the past 10 years, they’ve been calling upon Old Mutual to provide end-to-end solutions, what people term cradle-to-grave solutions. And it is only over the last five years that Old Mutual has seriously considered their vertical integration of financial services into its value chain. And, as a result of that, we have been piloting …… because of actually reiterating …… One of the models is to have an Old Mutual …… funeral services …… to buy. It could be said in those businesses we believe they share the same values as Old Mutual, or to create a climate of …… that provide services Old Mutual customers in their time of need.
And the reason why we’re doing that is just that we believe customers have got a choice. And we also believe that we need to provide continuous customer value that is affordable and of high quality. That is the reason why we decided to do this. And lastly, we’d be wiser to believe that we have to do this to help grow the industry through partnering with the role-players that are already there – particularly small, black businesses – and help them professionalise by providing them with funeral directors …… and acquire programmes to …… obscure them, and lastly, just …… ……. to customers.
DUDU RAMELA: So you would say what to an accusation that perhaps because of Covid-19 you are taking advantage of the situation? You say that this has been a call from customers for a while now – are you able to give us a timeline?
CLARENCE NETHENGWE: Like I said, it’s over the past 10 years. We’ve been doing research and one of the things that has been coming up constantly with customers who believe in the brand Old Mutual, and they believe that Old Mutual should be providing services of that nature. There are players in the market that you already know who provide such a service, but every time you mention Old Mutual, people do want Old Mutual to participate in the end-to-end value chain when it comes to the …… And it’s only over the past five years that we have seriously considered it and now we are testing the …… that I spoke about.
DUDU RAMELA: Given that you underwrite some of these funeral parlours, do you not foresee that this perhaps is a conflict of interest?
CLARENCE NETHENGWE: No, it’s not. Obviously it’s a very responsible business, and we comply with the regulations and law. And, from the corporate …… chief of PPI legislation to say we cannot use …… for any other vehicle besides what it was provided for. So there’s no way we’ll use the …… …… provided us to underwrite their customers, in order to swallow them – to use the words of Nafupa. We have to comply with the laws. We are a registered insurer, we have to comply every time we are subjected to the stringent compliance requirements. So we have to continue to do this.
One thing I need to put on the table there is that it is not uncommon for customers to basically provide us with …… ….. . It’s something that is quite a privilege in the industry, and as an organisation it’s something that we don’t necessarily promote, but it’s a reality of life that is out there.
I would want to have a situation where a lot of our customers actually have life policies, so they can leave a good legacy for their customers, because there are children and there are beneficiaries around being in a situation where you have to bury them with the policy that they have to then ……
DUDU RAMELA: What has been the level of engagement with Nafupa? They’re threatening that no insurance company will conduct funerals in townships or homelands from tomorrow, Friday, August 14.
CLARENCE NETHENGWE: It is one of those things in a democratic Africa where you have organisations threatening violence, calling other names such as white monopoly capital and ……. if I’m using a word offensive to others …… to find ourselves where we are really called names such as …… of white monopoly capital. When we have devoted ourselves to listen to all that, we serve our customers to the best of our ability.
So this …… just imagine if all the organisations in this world were to turn around and say, well, we need some job reservation, we need diverse skills to …… like each other ……. ……. because what we are increasingly saying is that when it comes to the funeral …… you are the business that ……. saying that particular thing. But that is quite sad because it’s like going back to 1948.
DUDU RAMELA: I hear you and the long-term implications, I guess, for the industry and clients.
CLARENCE NETHENGWE: Look, like I said, it’s all about choice. And when you have a wide choice and enough competition, you are …… I believe …… the right decisions. Who benefits ultimately? It is the customer. But the most important touch here is the …… checks that we go out and …… that Old Mutual is prepared to come to. When we …… particularly small businesses, we have put together a programme called the Accelerator Programme, which is yet to work with funeral services providers such as their members. And this problem is designed to help them manage their businesses, to …… operational framework, to segregate between personalised business funds, create more efficiencies in how they run their business. And it’s a three-year focus at no cost to the industry there, and Old Mutual is ……. and we are prepared to help. Our intention is to make sure that the industry grows because, when the industry grows, it benefits …… and that’s what ….. …… Old Mutual Group.
DUDU RAMELA: Thank you very much for giving us your side of the story on this issue. That was Old Mutual’s MD for Mass and Foundation Cluster, Clarence Nethengwe. Unfortunately even now we’re not able to get hold of Nafupa’s Muzi Hlengwa, and they are the ones who have made this accusation, pointing a finger at insurance companies – in particular Old Mutual – of swallowing up small black-owned funeral parlours by offering funeral services. So unfortunately we couldn’t bring you that, but that’s the perspective from Old Mutual for now.