Funeral policies can be issued without insured person's consent – Namfisa

A major gap in Namibia's funeral insurance regulatory framework has come into sharp focus after the Namibia Financial Institutions Supervisory Authority (Namfisa) confirmed that insurers are not legally required to obtain the consent of the person whose life is being insured under a funeral policy.

The disclosure follows questions raised about how funeral and life insurance policies can be issued on individuals without their knowledge, particularly in cases involving multiple policies across different insurers.

The issue gained renewed attention following recent allegations that funeral policies had been taken out on the life of a terminally ill woman, prompting broader questions about consumer protection, consent and oversight within the industry.

In a written response, Namfisa told Namibian Sun that insurers and intermediaries are required to establish and verify an insurable interest before issuing cover.

This means the policyholder must demonstrate a sufficiently close relationship with the life insured and show that they would suffer a genuine financial loss if that person died.

However, the regulator acknowledged that current legislation stops short of requiring the life insured to explicitly consent to funeral cover being taken out in their name.

"While the current legislative framework does not specifically require insurers to obtain the consent of the life insured for funeral cover policies, insurers are expected to apply sound legal and business principles and conduct adequate due diligence to establish insurable interest and detect irregularities before issuing cover," Namfisa said.

Namfisa also confirmed that Namibia currently has no industry-wide mechanism allowing citizens to determine whether funeral or life insurance policies have been taken out on their lives across multiple insurers.

Insurance records are maintained separately by individual companies, meaning a person could theoretically have policies issued by several insurers without any single entity having a complete picture of the cover in place.

"At present, there is no central industry-wide mechanism that enables individuals to determine whether life insurance or funeral cover policies have been taken out on their lives across multiple insurers," the regulator stated.

Growing concern

While some insurers have internal systems designed to identify over-insurance within their own portfolios, Namfisa said it is unaware of any industry-wide database capable of detecting or monitoring cover across all insurers.

The absence of such a system persists despite the existence of Namfisa directives I/STI/03/2015 and LTI/03/2015, which require insurers and intermediaries to establish mechanisms to prevent over-insurance and under-insurance and to inform policyholders of the consequences of both.

More than a decade after the directive was issued, however, the regulator has acknowledged growing concerns about over-insurance, misrepresentation, and unethical sales practices in parts of the funeral insurance market.

Namfisa also confirmed that it has received complaints from consumers alleging that funeral or life insurance policies were taken out using their personal information without their knowledge.

According to the authority, these complaints typically involve suspected misuse of personal information, misrepresentation and irregular sales practices.

When such complaints are received, Namfisa reviews supporting documentation, engages the insurer involved and takes action where consumers have been prejudiced. This may include policy cancellations, premium refunds and engagement with intermediaries where misconduct is identified.

Cases that show signs of fraud or criminal conduct may also be referred to the Namibian Police for investigation.

The regulator was unable to provide the number of complaints received over the past five years, saying the figures are still being verified.

Another significant disclosure is that Namibian law places no limit on the number of funeral or life insurance policies that may be issued on a single individual.

Instead, insurers determine the number and value of policies based on their own underwriting practices and product requirements.

"There are currently no statutory limits under Namibian law prescribing the number of life insurance or funeral policies that may be issued on a single individual," Namfisa said.

Although there are no legal limits, the authority warned that excessive or duplicate funeral cover taken out primarily for financial gain undermines the principle of insurance and may expose consumers to harm.

Namfisa said insurers and intermediaries remain responsible for verifying insurable interest and for implementing measures to prevent over-insurance at the point of policy issuance.

The regulator nevertheless acknowledged that emerging risks within the funeral insurance market require closer scrutiny.

"Namfisa has observed increasing concerns relating to over-insurance, misrepresentation and unethical sales practices within certain segments of the funeral insurance market," the authority said.

As a result, the regulator said it is intensifying its engagement with insurers and intermediaries while evaluating additional measures to strengthen market conduct and consumer protection.