Funeral companies InvoCare Limited (ASX: IVC) and Propel Funeral Partners Limited (ASX: PFP) have been the likely winners from the criticisms raised by Hayne royal commission in respect of funeral insurance companies for getting involved in fraudulent activities.
InvoCare Limited which holds the majority of market share in funerals industry and the rival Propel Funeral are the only providers of distinctive pre-paid contracts where customer can pre plan the funeral and pay upfront, at currently prevailing prices for future services. As funerals insurers may be forced shut down by the corporate regulators, the pre-paid contracts offered by the duo appear to be more captivating to the consumers.
On the insurance front, the traditional products offered by the funeral insurers have been slammed by Hayne royal commission for paying considerably less than their obligations. The royal commission told that many insurers pay out just one third of the premiums collected by the insured.
The commission has called on Australian Securities and Investments Commission to utilize its forthcoming product intervention authority to shut down the sale of junk funeral insurance products. It is expected that the products offered by funeral insurers may go into the overhaul for examination by the corporate regulators or it may be disposed of completely.
InvoCare chief executive Martin Earp said that funeral insurance is not a good value for money to consumers rather the benefits derived from pre-paid funerals are of much importance. He added that by locking in the funds at today’s price for future funeral services avoid to casts extra cost burden arising from higher premiums in case of funeral insurance.
Likewise, Propel Funeral Partners’ chief executive Albin Kurti stated that funeral insurance end up costing much more which eventually defeats the purpose of pre-planning.
With the new product intervention powers, the regulators will seize the authority to prohibit or limit the sale of injurious products to consumers.
Ahead of Royal Commission’s inquiry into the funeral insurance and the related services industry, both InvoCare and Propel Funeral were spotted in red on ASX today. The share price of InvoCare Limited has plunged by 0.338% to $11.780 while Propel Funeral Partners’ stock was down by 0.725% to $2.740 on 4 October 2018.
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