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.
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 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.