Burial Societies Are Susceptible To Serious Collapse Risks
Burial Societies are a phenomenon gripping the diaspora communities right now. This is galvanised by the reality on the ground. Over ten years ago it was rare to hear of diaspora death but now it’s a daily occurrence. 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.
Of Funeral Costs Risk – over time escalation of funeral costs may render agreed
benefits meaningless which would result in membership disengagement and
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 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.