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Slow death for Spain’s funeral homes

Eight large firms control 20% of the sector, with insurance companies calling the shots

José María Malga in his funeral chapel in the town of Conlunga (Asturias).
José María Malga in his funeral chapel in the town of Conlunga (Asturias).Paco Paredes

When he was a boy, José Malga used to play among coffins. His father worked for the Fernández Molina Funeral Home in the village of Caravia, in the northern region of Asturias, and the boy would sometimes help him haul the deceased by handcart to the funeral home. Today, mourners unable to attend a burial can send condolences and flowers by internet.

Changing times have seen large companies build five-star funeral homes, which are increasingly favored by the insurance companies who provide burial cover. Today, there are more than 1,800 funeral homes in Spain, with 21 percent of the business in the hands of just eight companies, according to government figures.

Wakes used to take place at the home of the deceased, with the coffin placed in the living room 

Malga, now aged 60, moved from Caravia to the larger community of Colunga when he was 21 to work for the Fernández Molina Funeral Home there. After 12 years, in 1978, he set up his own business.

“In the old days, things were much more formal,” he says, explaining that when he worked with his father, the wake would take place at the home of the deceased, with the coffin placed in the living room so that friends and family could pay their respects. Coffee would be on offer, accompanied by anis for the ladies and brandy for the men.

Insurance companies call the shots

Some 20 million Spaniards have insurance covering their burial costs, according to Unespa, the umbrella organization for Spain’s insurance companies. In total, around 60 percent of burials are now managed by insurance companies.

In small localities, it used to be that the insurance sales agent was the same person who ran the local funeral home. This is how burial insurance came about in Spain. In other countries, policies would cover just the cost of the burial, but in Spain, it covers the funeral service as well. In other words, the insurance companies who now control most of the country’s main funeral companies handle all aspects of a death.

The links between insurance companies and funeral homes are now limiting competition in the sector, with three companies, Ocaso, Santa Lucía, and Mapfre, controlling around 73 percent of the funeral business in Spain.

The previous government of José Luis Rodríguez Zapatero was preparing draft legislation aimed, among other things, at obliging insurance companies to offer clients greater choice in deciding on burial and funeral arrangements. The legislation was approved in June 2011, but was stalled by the change of government in November of that year.

“At first, people didn’t like the idea of removing the deceased from the family home, but when the insurance companies began covering the cost of the laying out in the funeral home in the 1960s, it soon became the normal thing to,” says Pedro Valencia, who heads Spain’s only funeral consultancy.

In 1996, Spain’s mortuary services sector was opened up to competition, which saw large companies take over cremation and burial from municipal authorities. One of the largest, Funespaña, has 466 funeral homes throughout 22 provinces, and in those where it has no direct presence it subcontracts out to small companies.

Six business owners in the eastern part of Asturias, among them Malga’s former employers, decided to merge in 1985, setting up Funerarias del Oriente to improve their competitiveness. Malga turned down the opportunity: “My business is part of me, like my own arm. It wouldn’t be the same without my name on it.”

To meet the growing preference for holding wakes in funeral chapels, rather than at home, Malga built his own in 2004, just 15 minutes from the village church.

“It was the only funeral chapel in the town, everybody went there,” says one resident. Malga says that he held around 80 services a year, earning at least €1,000 each time. In 2009, Funerarias del Oriente, which now belongs to the largest funeral group in Asturias, also built a funeral chapel in Colunga, and Malga began losing around 20 clients a year. Faced with competition from large complexes where the wake can be held along with the funeral service and then the cremation, small companies like Malga’s, which still make up more than 90 percent of the market, have little choice but to sell up, merge, or close down, says Pedro Valencia.

Malga’s firm hands out lighters that say: “Keep on smoking! Funeraria Malga is waiting for you”

Malga’s firm does its best to market its services, giving out umbrellas reading: “Funeraria Malga, your final resting place,” or lighters that say: “Keep on smoking! Funeraria Malga’s waiting for you.” The company is clearly popular with local people. “Malga took care of all the paperwork when my father died. Even after the funeral, when we had to sort out the inheritance,” says Paco Fernández, who took over his father’s bar. A customer, Juan González, sips on a coffee and adds: “I’m insured with NorteHispana, so that when the time comes, they can call Malga.”

Around 60 percent of Spaniards have insurance to cover burial costs. “The big insurance companies work with Funerarias del Oriente. I’m in touch with the smaller, newer companies,” says Malga, most of whose customers come directly to him. The close links between funeral companies and insurers explains the unequal competition in the sector. The big three insurance companies, Ocaso, Santa Lucía and Mapfre have bought dozens of small funeral companies over recent years, giving them a leading role in the funeral sector. Ocaso owns Servisa, Santa Lucía bought Albia, and Mapfre has acquired Funespaña.

Malga’s funeral home is located in a typical casa de indiano, the large, elegant homes, identifiable by a palm tree planted in the garden, built at the turn of the 20th century by returning emigrants who had made their fortunes in the Americas. Inside, the lighting is dim and the décor somber. In contrast, the competition’s premises, on the outskirts of the town, is purpose built, light and airy, with two funeral chapels in situ, spacious waiting areas with leather sofas, and magnificent views out across the Sueve hills.

When I collect the deceased, I know the family, and I know how to treat them”

In nearby Gijón, Asturias’ second city, Funeraria Gijonesa, the region’s largest funeral home, is modernizing its premises, built in 1993. Its décor reflects changing attitudes whereby families prefer to celebrate the deceased’s life, and could be mistaken for a mid-range hotel with its beige tones and modern furniture.

But Malga says he won’t be making any changes soon, and that his personalized service is what sets his business apart. “When I collect the deceased, I know his or her family, and I know how to treat them, what they need,” he says.

Malga has no intention of either selling, merging, or closing, he says. His eldest son, Rubén, will take over when he retires, albeit with a different approach to his father. “This is a business, and you can’t get too involved. When you know the family of the deceased personally, this closeness diminishes the extent to which you can be fully professional,” he says. But Malga refuses to budge, and is already looking to the next generation after his son. “Hugo, my grandson, is very hardworking; he’s only 10, but he already cleans the coffins.”

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