More than 1000 people have been evacuated at Silvertown township and eGoli township in Komani (Queenstown) in the Eastern Cape after heavy rainfall caused floods. Picture: Bheki Radebe
Insurers are bracing for a wave of claims following the declaration by the government yesterday of a state of disaster due to the flooding in parts of the country.
President Cyril Ramaphosa declared a national state of disaster, the second in a week, to enable an intensive response to widespread flooding that has affected seven of the country’s nine provinces. He also declared the electricity crisis a state of disaster in his State of the Nation Address last week.
Mpumalanga and the Eastern Cape have been most affected by the floods, which were brought on by heavy rainfall as a result of the La Nina weather phenomenon, according to a statement from the office of the Presidency yesterday.
There was also flooding reported in Gauteng, eastern KwaZulu-Natal, Limpopo, the Northern Cape, and North West regions, with many people reportedly displaced from their homes, an as yet unknown number of people swept away and many buildings, structures and vehicles impacted.
Santam, the country’s biggest short-term insurer, said yesterday it was already receiving claims from all the areas in the country affected by the recent flooding, but the number could not yet be quantified,
Most of the claims received so far related to water damage in homes and businesses and a desk-based team of assessors was dealing with most of these claims digitally.
South Africa’s short-term insurers had to pay out substantial claims from flooding in KwaZulu-Natal last year, which tragically claimed hundreds of lives. Close to 130 000 people were affected and there was more than R17 billion in infrastructure damage .
Santam said these floods had been the most significant in its history (it was founded in 1918), and its claims exposure came to R4.4bn – reinsurance provided protection against the catastrophe, limiting the net impact to R566 million to the firm.
A competitor, Old Mutual Insure, saw these floods wipe out R135m off its operational results.
OUTsurance Holdings chairperson Herman Bosman said in its latest annual report a feature of its business over the past two years had been the increase in extreme natural peril events, including the floods in KwaZulu-Natal, which has highlighted that climate change is the insurance industry’s biggest long-term challenge.
The insurer last year had to adjust a range of premiums as well as make underwriting changes to deal with the increased climate risk going forward.
In recent years, extreme weather patterns such as heat and cold waves, storms, floods and droughts, with a lack of infrastructure development and maintenance, has exacerbated the effects of climate change, the South Africa Insurance Association (SAIA) said in its latest annual report.
“All these have had an adverse financial impact on the insurance industry, as well as the uninsured. The need for urgency to address climate change is supported by the 2021 Global Risk Report of the World Economic Forum (WEF), which places climate action failure and biodiversity loss among the top 10 global risks,” SAIA said.
“Stakeholders can no longer downplay the significance of assessing the impact of climate change. SAIA and its members… have embarked on collaborative industry-wide projects that include government agencies and regulators to conduct research and put together solutions to address these identified risks,” SAIA said.
SAIA is also involved with the National Treasury climate change working group, ensuring knowledge transfer to members on relevant climate change topics, as well as assistance to the Task Force on Climate-related Financial Disclosures (TCFD) reporting requirements.
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