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Insurance claims skyrocket as storms, floods hammer SA

More frequent and severe weather patterns have resulted in increased insurance claims. Picture: Maxim Shklyaev/Pexels

More frequent and severe weather patterns have resulted in increased insurance claims. Picture: Maxim Shklyaev/Pexels

Published Nov 16, 2023


Some insurance brokers expect this week’s hail storm in Johannesburg to be the biggest claims event in the past three years; others say the September storms in the Western Cape are bigger.

Overall this year, however, there has been an increase in the severity and frequency of weather-related insurance claims – and the majority of compensation requests for the Johannesburg storm have not even come in yet.

Based on the claims received already this week, Ernest North, co-founder of digital insurance platform Naked, says the storm caused major water damage and had a “substantial impact” on buildings, including windows, roofs, ceilings, and internal and external walls. There were also a high number of claims related to car damage, including glass and body damage, and damage to solar panels.

“The time of day has a significant impact on whether we see significant hail damage to cars. A hail storm during peak hour traffic in Gauteng would result in enormous losses. Monday’s hail storm was a bit later in the evening so we saw fewer claims for cars than we would have if it had occurred in peak hour traffic.

“Although most cars were parked, we are still getting a lot of claims for both glass – including windscreens, and car body damage.”

While it is too early to give exact numbers, he says data shows that this storm will be the biggest claims event of the past two or three years. Other major recent claims events include:

– Flood in Franschhoek and surrounds: September 26, 2023

– Hail storm on the East Rand in Gauteng: October 15 to 17, 2023

– Hail storm in central Gauteng: December 5, 2022

– Mpumalanga storms and flooding: May 20 to 24, 2022

– KZN floods: April 2022

Apart from this week’s hail storm, Sandro Geyser, managing director of IntegriSure Brokers, says it has seen an increase in both the severity and frequency of weather-related storms.

“Monday’s unexpected hailstorm in northern Johannesburg resulted in significant vehicle damages, catching many clients unprepared. Assessments for claim values are ongoing, making it premature to provide specific figures at this stage.”

But uncertainty is the new normal, he notes, citing data from the Swiss Re Institute that shows weather-related re-insurance events – arrangements whereby an insurer transfers all or part of a risk to another insurer to provide protection against the risk of the first insurance – did not surpass 50 events per year once in 1990 to 2000 period. However, from 2010 to 2020, it surpassed 50 events per calendar year in eight of the 10 years.

“The cost is further compounded by population growth, urbanisation, lack of flood control measures such as stormwater management, and general maintenance.”

The full extent of weather-related insurance claims in South Africa for 2023 will be difficult to quantify, but IntegriSure has seen the average cost of these claims increase 22 percent over the past year. Thus, claims values have increased more than inflation due to supply chain disruptions, increased costs of material, increase in fraudulent claims, and the cost of re-insurance.

“Add frequency to the mix and it’s a recipe for a perfect storm.”

The most severe weather event witnessed by the industry in 2023 occurred during the storms in the Western Cape in September, he says.

“Many of our clients’ vehicles remain unrecovered, and significant damages to buildings and their contents resulted from the flooding.”

Bryte Insurance expects claims related to the Johannesburg hail storm to increase over the next couple of days, but Reynier Rautenbach, head of specialist claims, says that, from a risk perspective, South Africans should not just be thinking of severe storms as isolated events. Rather, they should see them as part of a pattern of increasing extreme weather events across the country. The way we manage these risks needs to evolve to keep up with the changing climate.

“In KwaZulu-Natal, our data shows a marked increase in both the rate of severe weather events and the average cost of claims. Meanwhile, the 2023 Western Cape floods show how devastating extreme weather can be.”

It is also important for property owners to appreciate that the cost of an insured event is going up as factors such as inflation and a weaker rand increase the cost of construction work. Similarly, the cost of repairing or replacing vehicles has also steadily increased.

Furthermore, climate risks do not occur in isolation as many factors affect the severity of a storm or other extreme weather event. These include the state of public infrastructure and weather-effective risk mitigation approaches.

“Given the systematic challenge posed by climate change, all stakeholders need to work together to invest in cost-effective solutions that support economic growth and make society and the economy more resilient.”

IOL Business