(Image: Private Media)

This is part two of Preying on Grief, Crikey’s four-part investigation of the funeral industry. Read part one here.

The funeral industry is a massive money-making machine. Industry revenue was projected to hit $1.6 billion in 2020-21 with Australia’s ageing population fuelling that figure. The number of Australians aged 85 and over is expected to double to more than 1 million by 2042. 

Many grieving families faced with the stigma of being seen to skimp on loved ones’ funerals are unaware of their choices for saying goodbye, with funeral companies pushing back against initiatives to improve price transparency.

Grief on a pamphlet 

When Sandra van der Laan’s sister died unexpectedly in 2014, van der Laan rang two funeral providers and got similar quotes of about $6000 for a funeral and cremation package. But when she tried to delve into how the costs were calculated, one funeral home refused to provide a breakdown, while the other worked with her to reduce costs. 

“We ended up getting a much cheaper funeral, and if I knew what I know now it would have been cheaper,” she told Crikey.

Van der Laan, a professor of accounting at Sydney University, later conducted a study into costs in Australia’s funeral industry.

There are four aspects to a funeral: disposing of the body; the ceremony; memorialisation, such as a tombstone; and planning and paying for the funeral.

Disposing of the body is the only thing a family legally has to arrange — but funeral providers often present an expensive package combining all the other aspects as a necessity. 

“People don’t understand their choices,” van der Laan said. “They’re grieving, they’re vulnerable, and they get handed a pamphlet [by the hospital] that says, ring your local funeral director … and then you end up buying a package because that’s what funeral directors sell.” 

More than half of all Australians die in a hospital — just 14% die at home — and hospitals generally require bodies to be removed within 48 hours. 

Asking questions while grieving is tough, and not something many families do because of taboo and stigma — few want to be seen as skimping on a funeral. 

“It’s perceived as being unfriendly when you ask questions about price around someone’s funeral,” said van der Laan. “You’ve got to remember the people on the end of the phone or even the people that come out to your house to help you arrange your funeral, they are sales people.”

Upselling every aspect  

This stigma is exactly what many funeral homes rely on to peddle expensive services.

The funeral industry has an average profit margin of 15%. Nearly a quarter of that comes from professional service fees (with some studies finding fees made up 39% of costs) which include running ceremonies, transporting bodies and preparing them for viewing. It doesn’t include the more expensive aspects of cremation, burial or medical certification. 

Funeral providers charge widely different amounts. In 2019 the consumer advocacy group CHOICE found the cost of a direct cremation with no ceremony ranged from $1200 to $5600 in 2019. Prices for viewing the body ranged from $110 to $1600. 

Coffins also have a high mark-up, some as high as 200%. Coffins sell at Costco for $899 but a similar standard coffin will sell at a funeral home for $2000. Some providers charge a fee for families who want to bring their own. Coffins can be made from cardboard, but few funeral homes offer this option. 

When Colin Wong’s grandfather died in 2014, Wong attempted to book a funeral director — but none agreed to give him an upfront quote, insisting instead to run through his options in person.

“It was highly emotional and you can’t do that another two, three, four times to get more quotes,” he told Crikey.  

So in 2017 he established funeral pricing comparison site Gathered Here, calling different companies for quotes and listing them on the site. 

“That created a bit of a stir,” he said. “We had a number of legal threats and a number of non-legal threats.”

Funeral directors threatened injunction orders and ordered him to remove their prices from the website, but eventually they backed down after Wong received pro-bono legal help. In the years since, many states have made it mandatory for funeral companies to provide information about itemised costs and services.

Imbalance of power

While price transparency is a start, there’s still a big power dynamic between funeral directors and grieving families, Dr Hannah Gould of Melbourne University’s DeathTech Research Team tells Crikey.

“Many have a basic fee package you can find on their website and then they’ll often convince you, for better or for worse, that you really do need this better package,” she said.

“It’s like the second cheapest wine phenomenon. You don’t want to get the cheapest, and it’s even more so for a funeral …” 

In NSW, burial plots can be bought permanently or via leases of 25, 50 or 99 years. But an Independent ­Pricing and Regulatory Tribunal report found just 0.4% of people in 2018-19 chose the leasing option — suggesting very few were offered it. 

“There’s a lot of things about like the structure of that purchase interaction that shifts the balance of power away from the consumer,” Gould said. 

This power dynamic was abused when selling funeral insurance, the Hayne banking royal commission found. A 2015 Australian Securities and Investments Commission report found premiums spiked once people hit age 50, and many people cancelled their policies as prices increased, leading them to lose out on anything already paid. 

In 2014 the number of policies cancelled was 80% of the number of policies sold, with most policies cancelled within a year. Many funeral insurance plans don’t cover all aspects of the funeral — people often pay much more than they receive.

Some agents were found to be targeting Indigenous communities by giving the appearance of being Aboriginal organisations in an effort to sell their products to younger consumers. Regulation has since been updated to improve protection for consumers.

Next: the housing crisis for the dead.