AVBOB: Africa’s Largest Mutual Assurance Society

When we at CEO Today spoke with Frik Rademan, we asked him about the path that led him to become CEO of AVBOB. He studied part-time through the University of South Africa (UNISA) whilst working at an audit firm, and subsequently accepted a job with Anglo American Corporation (Gold & Uranium Division) as a Senior Profit Analyst before joining the AVBOB Group in 1982 as a Financial Manager. He was then promoted to AVBOB head office in Pretoria as General Manager of Finance in 1989 and was appointed as Group Financial Director in the late 1990s, before becoming Managing Director of the insurance division and CEO in 2011.

Below, Frik tells us more about AVBOB which is celebrating its centenary anniversary, the business behind the firm, and what’s in store for the company moving forward.

How have you and AVBOB celebrated its centenary anniversary?

AVBOB celebrated a historical milestone on 15^th August 2018 which was one of the highlights of my career with the Group. We decided that we wanted to celebrate this occasion with all our stakeholders and make a significant impact on peoples’ lives. On 15^th August 2018, we announced a special Centenary Bonus of R3.5 billion to be allocated to our members by means of a unique facility known as the “AVBOB Reward Account” (ARA.)

We also had a centenary gala event on 15^th August which was attended by some of our staff members, pensioners and business associates and our guests received a copy of the AVBOB history book which was commissioned more or less two years earlier. This book captured AVBOB’s historical development and growth since it was established in 1918. Similar functions were held for our staff members across the country to celebrate our centenary.

What traits of leadership and progress are at the core of AVBOB’s mission?

I believe in a hands-on approach to everything I do in life. I also believe in promoting a role culture as opposed to a task culture, and that is the basis of our One AVBOB approach which requires every person in the organisation to roll up their sleeves and do whatever is necessary to be done, whether that was part of your original job description or not. To achieve our vision and mission, we need to give the customer what he wants, when he wants it. Further to that, we make every effort to ensure that every encounter with every stakeholder becomes a positive and memorable experience as we want all our stakeholders to benefit from their association with AVBOB. I believe that these things, together, have contributed greatly to our successes and progress over recent years.

What does belonging to a Mutual Society entail? What does this mean to AVBOB?

As a Mutual Assurance Society, we do not have any shareholders, only policyholders or members, and they benefit directly from our successes. Because we do not have external shareholders who can expect or demand dividends, we can share surplus profits with policyholders and we do that in the form of free funeral benefits and special bonuses. AVBOB is the largest Mutual Assurance Society in Africa and provides the entire spectrum of specialist funeral insurance and funeral services and products under one roof. AVBOB has three operating divisions: i.e. the insurance division which offers a comprehensive range of funeral insurance products; the funeral service division which offers the complete range of funeral services and products through a countrywide network of professionally run funeral parlours and AVBOB Industries – based in Bloemfontein, which manufactures coffins, wreaths, and funeralware.

To achieve our vision and mission, we need to give the customer what he wants, when he wants it.

What regulations are in place for funeral insurers in Africa? Are there any ways in which you feel these can be improved?

AVBOB is an authorised financial services provider, a member of the Association for Savings and Investment South Africa (ASISA) and a member of the National Funeral Directors Association (NFDA). The insurance industry forms part of the financial services sector and is regulated by both the Prudential Authority (PA) and Financial Sector Conduct Authority (FSCA) and are subject to extensive legislation. From a financial reporting point of view, we comply with International Financial Reporting Standards (IFRS). From a regulatory point of view, we comply with the requirements of Solvency Assessment and Management (SAM) including the Own Risk and Solvency Assessment Requirements (ORSA). The funeral service sector is not as strictly regulated as the financial services sector, but we pride ourselves in the fact that we apply the same product and service standards throughout the organisation and legal compliance and corporate governance are always high on our agenda.

As CEO, what would you say is key for maintaining happy clients and happy employees?

We regard our policyholders and other clients as family and our advertisements state “family comes first, always”. It’s not just lip service, it is entrenched in our values and forms part of our organisation’s culture. When people require our services, they are going through a very difficult time in their lives, they are traumatised, emotional and feel vulnerable. That is when they need somebody to rely on, who can give them peace of mind and, most importantly, deliver on the promises we made. Therefore, the competence and wellbeing of our workforce is key. They are the ambassadors, the personification of the brand. Our staff members give life to the values, standards, products and services and that is why we do whatever we can to make sure they are happy members of the family. To demonstrate the Society’s commitment to its personnel the AVBOB Board approved a “centenary” cash bonus to be paid to all employees (excluding the Executive Committee) and even our contractors and funeral agents were rewarded as part of the celebrations.

What could other companies in the funeral industry learn from AVBOB?

I believe there are a number of things we do right which counts in our favour, but every organisation has its own way of doing things and its own culture. My personal point of view, however, is that a customer, in his/her time of need when they have lost a loved one, wants to know that they will be treated fairly and professionally. As a service provider, you have to be empathetic and understanding, but at the same time, you have to be professional and render the best possible service. Unfortunately, there are many unscrupulous service providers in the funeral service industry and their dodgy business practices created a negative image of funeral service providers in general. As a result, the reputable funeral service providers are also treated with suspicion and a customer’s trust and loyalty must be earned with every encounter.

When people require our services, they are going through a very difficult time in their lives – they are traumatised, emotional and feel vulnerable. That is when they need somebody to rely on, who can give them peace of mind and, most importantly, deliver on the promises we made.

Are there any exciting projects lined up for the future that you can tell us about?

We are always considering new and innovative ways of doing things better, more effectively and ultimately to benefit our stakeholders. We are aggressively opening new branches in the townships and rural areas in order to provide easier access to our services for policyholders and non-policyholders alike. We also invest in new technologies such as alkaline hydrolyses or flameless cremation. This water-based process will thus not create any harmful environmental emissions and has a carbon footprint equal to only 10% to that of flame-based cremation.

On International Mandela Day (18 July 2017) we announced a project which we are driving in partnership with the Department of Basic Education (DBE). It is known as the AVBOB Schools Infrastructure project, it is an investment of R150 million to renovate, refurbish and upgrade nine schools, one in each province, across South Africa. In response to President Cyril Ramaphosa’s plea to public enterprises to contribute to the urgent eradication of pit toilets at schools all over South Africa, we have decided to allocate a portion of the aforementioned investment to get rid of inappropriate ablution facilities at a number of schools identified by the DBE.

The AVBOB Poetry Project is a nationwide online poetry competition in all 11 official languages and is open to all South Africans. The project was launched in 2017 and during the first year, it has enabled thousands of aspiring and accomplished poets to receive recognition for their craft. At the end of the first year’s competition, the winners in each language category received a significant cash prize, and to coincide with our centenary celebrations, a 100-poem anthology, entitled “I wish I’d said,” was released in June 2018. The success of the competition inspired us to run it for another year and I am looking forward to seeing how it will grow and what the impact on people’s lives will be in time to come. The poetry competition won an international M&M Global Award on 20 September 2018.

AVBOB is dedicated to the vision of a great South Africa, and it is our intention to invest in the youth of this country, who have the potential to create a brighter future for themselves and their communities.