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What on Earth is Going On?

Storm in Cape Town

Navigating the Impact of Climate Change on Insurance in South Africa


Climate change is undoubtedly one of the most pressing issues facing clients and insurers today. The increasing frequency and severity of extreme weather events are undeniable, as evidenced by the surge in related insurance claims and news reports. South Africa, which historically experienced moderate weather, is now facing unprecedented and extreme conditions, such as tornadoes and severe flooding in KwaZulu-Natal (KZN), unexpected winter rains in Gauteng, and intense hailstorms. These changes are dramatically altering the risk landscape for both insurers and clients.



Thunder strorms and lightning damage in South Africa a car struck by a falling tree after a big storm
Wind in Johannesburg

The Growing Risks for Insurers and Clients

The shift in weather patterns presents significant risks. In the past, South Africa experienced severe hailstorms once every decade; now, such events are more frequent and intense. KZN, in particular, has become a hotspot for flooding and storms, occurring multiple times a year. These events lead to loss of life, property damage, and business interruptions, highlighting the need for adequate insurance coverage.



The Importance of Adequate Coverage

Given the increasing unpredictability and intensity of weather events, it is crucial for clients to have the right insurance coverage in place. Ensuring you are adequately covered can help mitigate the financial impact of these disasters. Here are some essential coverages to consider:


- Property Insurance: Covers your buildings, contents, and vehicles against damage from extreme weather.


- Business Insurance: Protects your business premises, stock, machinery, and covers loss of income following a disaster.


- Life and Disability Insurance: Provides financial protection in the event of injury or death resulting from severe weather events.



Big changes in Natal, tornado destroying buildings inside a town
Tornado hits Natal

Future Implications for Insurance Premiums

Currently, these coverages are available, but the cost of insurance is likely to rise as extreme weather events become more frequent. This trend is already visible in other parts of the world. For example, some American insurers have recently refused to provide building cover in Florida due to constant hurricanes. While South Africa has not yet reached this level of risk, the increasing frequency of extreme weather events will inevitably impact insurance premiums.



Ford Everest, or Ford Territory floating down a river after storm or flashflood
Flash Flood somewhere in South Africa

Reviewing Your Coverage

Now is an opportune time to review your insurance policies. Ensure you have the appropriate coverages to protect against extreme weather-related claims. Maintaining your properties and taking proactive measures to reduce risk can also help.



A severe thunder storm in South Africa. Lightning is the cause of huge claims in the insurance industry.

Conclusion

As we navigate these changing times, it's essential to take care of yourself and your loved ones. Consult your financial advisor to ensure you have the right insurance coverage in place. By doing so, you can rest assured that you are prepared for whatever Mother Nature throws your way.

For any questions or to review your insurance policies, don't hesitate to contact your insurance broker.



Written by Johnny Farinha

Insurance Broker

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