CAPE TOWN – In Aon Benfield’s latest Weather, Climate and Catastrophe Insight Report, 2017 was flagged as the costliest year on record for natural disasters. The global economic cost of natural disasters in 2017 clocked in at a staggering $353 billion (R5.1 trillion), while the insured cost was $134bn.
“It would also be remiss to believe that South Africa is not affected by its ample share of natural catastrophes. The Knysna fires in June 2017 racked up R1.95bn in insured losses, while October 2017 storms came in at R2.05bn – some R4bn in a 180-degree flip between fire and flood in just a five-month stretch,” said Pieter Visser, catastrophe analyst at Aon Benfield Analytics.
As cities in South Africa continue to grow, buildings and structures cover the landscape more densely, inevitably equating to a greater accumulation of risk. “The main factor for increased losses is larger more concentrated exposure, which means that if there is a natural disaster, more households, businesses and people are affected than fifty years ago,” said Visser.
Despite the fact, Individuals and businesses are increasingly under-insured for the financial impact of these events, as weather-related property and business interruption insurance claims continue to grow.
Weather events over the last few years have left no disputing that South Africa has seen a marked increase in the frequency and intensity of severe weather conditions with greater accumulation of exposure within cities and suburbs that are more densely populated.
“Events in 2017 – from crippling drought to blazing infernos to raging hail storms – highlighted just how vulnerable we are to climate change. Consensus from meteorologists is that South Africa should brace for a new normal of abnormally heavy rain and hail storms, powerful winds and drought conditions in many regions. With the October to January stretch ahead of us - traditionally the months that have tallied the most severe weather events and financial losses - there is a need for extra precautions and insurance scrutiny,” said Mandy Barrett, head of marketing and volume sales at Aon South Africa.
“When planning insurance covers – for your personal or business assets - the clarion call is to never assume the worst cannot happen. Many people believe that the likelihood of a catastrophic event such as a fire, flood or severe hail storm is unlikely, and as a result neglect to properly insure their property, with devastating financial consequences,” explains Mandy.
While many households and businesses owners are understandably looking to reduce costs and overheads in a tough economy, the need to do so without compromising your ability to recover financially from an insured peril is crucial.