AVBOB: There for You in Your Times of Greatest Need

Established in Bloemfontein in 1918, AVBOB has spent more than a century flourishing into Africa’s largest Mutual Assurance Society, with more than 7,000 staff providing a one-stop funeral insurance and burial service. “We set out to provide our customers with dignity and financial security through our shared value financial model,” AVBOB explains. 

“We want to empower our members by providing them with affordable integrated funeral and financial services products and by sharing with them and their communities the value we create,” distilling in just a few words the comprehensive, unique overarching aims of the society.

Partly due to its relative affordability, funeral cover has a notoriously exceptionally high penetration rate in South Africa, and from the approximately 17 million households in the country currently more than eight million lives are insured by AVBOB.

“AVBOB as a mutual insurance society is the pacesetter in the funeral industry,” the group states. “Because AVBOB is a mutual, a family, and family comes first, we place our customers’ interests at the heart of how we do business.”

FAMILY AFFAIR

Being a mutual society means that AVBOB has no external shareholders, instead members receive a share of AVBOB’s surplus profits. “Our members are our policyholders – the AVBOB family,” it once again stresses. “It is the foundation of our mutuality: to create and share mutual value with our family and be here for all South Africans. Always.

“The defining feature of a mutual society is that it is there for its members during times of need and everything is done for the benefit of its members.” This was one key element highlighted by CEO Carl van der Reit last year as making AVBOB truly unique. “In South Africa, contrary to the UK or Europe, being a mutual is really rather rare; there are only something like three of us with this status,” he explained.

“There is a significant need for mutual societies such as AVBOB, and our mutual ethos pervades everything that we do. We make regular declarations of profit back to our members, and the model has, in addition, allowed us to offer every person holding a policy with AVBOB a free funeral through our dedicated division, on top of all the other value for benefits. It is another way for us to be able to return gains to our customers.

“We have created a unique culture of customer centricity that is difficult to replicate elsewhere. Companies that truly stand out from their competitors are those that go the extra mile to offer an exceptional customer experience.”

Across three operating divisions lies a comprehensive range of funeral policies to meet the many and varied needs of the market, backed by a full funeral and cremation service via a network of highly-trained staff and a factory in excess of 14,000m² where an extensive range of coffins, wreaths and fittings is manufactured.

It is tragically inescapable that death, and the associated burial, is a process through which each of us will at some stage have to go through, and in South Africa a high mortality rate together with funerals being so important to the majority of the population mean that a large funeral services industry has been established.

Elaborate burials are still a significant status symbol to many in South Africa, spawning a funeral insurance industry valued at somewhere between R7.5bn and R10bn. A funeral can be a hugely expensive exercise – can cost anything from R600,000 to R3 million – and as such it is today the most popular insurance cover in South Africa.

GROWTH

AVBOB now has 379 branches nationwide, of which more than 200 are funeral arrangement offices and funeral agencies. Last year alone, this footprint grew by 11 insurance offices, the base from which agents provide comprehensive client services to policyholders, and four funeral agencies, which provide the accessible, one-stop funeral care to all of South Africa’s communities.

“Ours is the largest funeral service operation in the country,” van der Reit relayed, adding a further factor to cement AVBOB as a true one-of-a-kind. “More than simply the biggest, our being an integrated insurance and funeral service operator makes us truly unique in the country. Where other insurers stop at the point of a claim, that’s where our full service kicks in and we take it from there.

“As far as possible, we aim to provide a full-service offering at every AVBOB site.”

The last year was another decked with accolades, as AVBOB was recipient of no fewer than eight of the industry’s most prestigious awards. Thrilled by its selection in October as Best Funeral Provider by Best of Bloemfontein, the Group was then certified as a Top Employer for the fifth consecutive year, perfectly recognising some of the defining AVBOB values.

“We strive for excellence, always looking for ways to improve our systems, processes and products,” the Group stresses, “and our people should be challenged, learn new things, grow and take ownership of the things they do.

“As a key player in the funeral insurance and funeral service industry, we continue to build business strategies that cater for the current and future needs of customers.”

Not just physical growth, 2021 also saw total assets increase a whopping 23.8% to R35.1 billion. Premium income also rose by more than 10% to R5.7 billion, as total policyholders hit 2.5 million. AVBOB Funeral Service and AVBOB Industries achieved pre-taxation profits of R66.4 million and R23.3 million respectively, despite zero price increases for the latter.

“AVBOB entered its 104th year on a strong note on the back of the record performances of the previous year,” van der Reit began his assessment. “In line with industry trends and reflecting the difficult economic times in which our members find themselves, we have endured headwinds in the form of pressure on the persistency levels of our insurance policy book and volatility in investment markets. In response to these challenges, a number of changes to the business have already been implemented, and it remains exceptionally financially strong and well able to endure the current market turbulence.

“Our mutual status remains the cornerstone of our ethos, our purpose and our competitive differentiation,” he opined, “and being able to offer an integrated funeral insurance product and funeral service also continues to set us apart. Our impact on lives and livelihoods proves the relevance of what we do and our purpose and place in society.”