NASASA FUNERAL SCHEME
Sanlam and the National Stokvel Association of South Africa (NASASA) have launched NASASA Financial Services (Pty) Ltd; a brokerage catering to the financial services needs of the South African stokvel market. The new entity will foster greater financial inclusion for all members.
Jacqui Rickson, Chief Executive: Group Benefits at Sanlam Developing Markets Limited and Board member of NASASA Financial Services says, “For South African stokvels this is an opportunity to formalise their existence without having to forego their traditions. The peace-of-mind that each member of a stokvel will be protected in their time of need is invaluable.”
“Stokvels are powerful financial services providers in their own right,” says NASASA Financial Services CEO, Mizi Mtshali “and have the potential to help grow South Africa’s economy once they enter the more formalised sector through appropriate product offerings”. Currently, there are over 800 000 stokvels in the country, aggregating an estimated R50-billion pa. They are, however, quite exposed, especially to liquidity issues that may render them unable to discharge benefits to their members, as well as scams that promise to resolve such issues. This results from a lack of accessible, relevant products that meet the needs of a more informal savings sector.
As a result, some burial stokvels may not pay enough to cover funeral expenses in their entirety. By offering broad-based financial services to members, NASASA Financial Services will empower stokvels through greater socio-economic inclusion and security.
Jacqui Rickson says, “This venture supports our client-centric focus by allowing financial inclusion to be extended to South Africans who are on the edge of the formalised insurance structures. Through this, we can help families recover financially following difficult, unexpected events.”
NASASA Financial Services is currently licensed as a Juristic Representative of Sanlam Developing Markets, with a long-term plan to become a Financial Services Provider (FSP). NASASA Financial Services will distribute tailor-made products nationally via its distribution force. Sanlam as underwriter, through NASASA Financial Services, will initially offer group-based funeral benefits, tailored to each individual type of stokvel.
Products are competitively priced and start at R15 per person. Once the stokvel has selected its option, the stokvel will pay one premium for the whole group. For burial stokvels, Sanlam has designed a full product, covering up to nine family members and all products have been created in partnership with NASASA.
Currently, the product offering includes:
• A Principal Member Only Funeral Benefit
• An Immediate Family Funeral Benefit
• A Principal Member Plus Up To 9 Dependents Funeral Benefit
• Grocery and Airtime Cash Benefits
NASASA is about educating their members about wealth and more appropriately, financial health, which includes saving on the expense of premiums through aggregation and paying group rates rather than more expensive individualised rates. We’ve designed products as an extension of this; as a tangible, affordable, non-intrusive offering that seamlessly blends the required formal structures with community-based traditional structures.
Mizi Mtshali, NASASA CEO, adds, “The research conducted during the build-up of our product launch saw the solution being entirely built by participating stovels. As a result, we deliver unmatched value by building a solution briefed in by our constituency. Amongst the majority of South Africans, funeral insurance fulfils an unmistakable need. While many are excluded from the formal financial system, those who do interface with the sector largely feel inadequately serviced. Burial Societies are formed as providers of such services and have developed systems around the real needs of their members. There are roughly 200 000 active Burial Societies in South Africa, with the majority being self-underwritten.
Because such groups rely on their collective savings to discharge their benefit to members, they often face liquidity problems that may lead to their disbandment. This brings about the need for an underwriter who will take on the risk on behalf of the group, as well as offer a set of products and services built around the group’s needs. NASASA is tasked by its members to solve this problem, and we have identified Sanlam as the most suitable partner in this regard.”
Mtshali says this venture will also facilitate job creation, which is key to socioeconomic inclusion, “For South Africans, this opportunity provides meaningful employment particularly in the township economy. Not only is this a step towards financial inclusion, but a giant leap towards societal transformation”.
Down the line, NASASA Financial Services is aiming to extend its offering to include life cover as well as short-term products like household insurance and is investigating the potential of integrating other banking products.