Burial scams burying the poor
2003-08-08 14:40
Cape Town - Lack of insurance cover places poor South Africans under increasing financial pressure as they struggle to find funds to bury loved ones dying from Aids.
Parliament's finance portfolio committee on Friday urged the government to look into the implications of people living with Aids not having access to insurance cover.
Committee chairperson Barbara Hogan said she hoped the insurance industry itself was looking at ways of improving services to people with Aids.
"I do have sympathy for the risk that the industry is being asked to take on, but we need to take on quick initiatives.
"It is creating a huge cycle of poverty. Families sometimes have to bury more than one person who has died from HIV/Aids and they never recover from the financial burden."
She urged the Financial Services Board to investigate ways of cracking down on illegal funeral schemes that preyed on the poor.
"Let us at least move on the illegals and see where we can go from there," she said.
Earlier, the Black Sash appealed to the committee to help guard against financial-services providers stripping social grants through automatic deductions.
Fraudulent policies are issued
"The Black Sash strongly believes it is in the state's interest to ensure the monies paid as social assistance are not used to bolster the profits of private financial service providers," said Isobel Frye, the group's national advocacy manager.
She said Black Sash advice offices had received many complaints from holders of funeral policies.
These included, among other things, brokers not explaining details of a policy, or the need for full disclosure; the incorrect repudiation of claims; and the issuing of fraudulent policies.
Frye said her organisation was aware of "literally hundreds" of cases where money was being deducted from grants or bank accounts without the person ever having signed for a funeral policy.
"Of great concern is the number of fraudulent policies that are written up, allegedly on behalf of indigent clients."
The committee is holding hearings on funeral-scheme benefits, after complaints from the public about abusive practices.
Frye said her organisation was in favour of banning any kind of deduction from state grants, given the extent of abuse.
The departments of finance and social development should conduct an investigation into the feasibility of setting up a non-profit funeral scheme.
The government would not necessarily have to finance the project, but could put in place regulations to stop insurers from abusing the poor and illiterate, she said.
Hogan suggested the issue of deductions from social grants was a source of serious concern, and should be taken up by the state's budget council.
- SAPA