Castagno is currently an independent non-executive director of Post Office Insurance and is also a member of the Chartered Insurance Institute.
He will initially serve on the audit, remuneration and nomination committees.
Castagno said: “I am excited to be joining the board as independent non-executive chairman at such an important time for Dignity.
“I am looking forward to working with Gary and my other board colleagues as we work towards realising the significant unlocked value within the company for the benefit of clients, employees, shareholders and wider stakeholders.”
Gary Channon, chief executive, added: “I am delighted that John has joined the Board of Dignity plc. His significant financial and commercial experience will be invaluable as the Company’s independent non-executive chairman.
“I very much look forward to working with him in my new role as CEO, both on the future success of the business and further appointments to the board.”