By Melanie Gosling
Environment Writer
As the effects of climate change intensify, large areas of South Africa could become uninsurable, according to Santam's chief executive Ian Kirk.
"Huge tracts of this country, and of the world, could become uninsurable or become unaffordable to insure. It depends if we're successful with reducing our carbon emissions.
"If we're not successful, our risks are going to increase significantly, and there comes a point when a risk is too high to cover," Kirk said.
Kirk was speaking at a forum organised in the city this week by the University of Cambridge Programme for Sustainability Leadership on what the failure of the Copenhagen climate change negotiations means for business.
"Our organisation is paying claims now to farmers and property owners in the southern Cape for fire damage. Two-and-a-half years ago they were under water. It's affecting us and we have to rise up to this," Kirk said.
In an interview later, Kirk said Santam was following the lead of insurance companies in Europe and the USA and re-examining the rating of insurance risks in certain areas where the affects of climate change were already being felt.
The organisation was working with UCT climate change specialists to plot areas of high risk, particularly regions vulnerable to sea level rise and flooding. Infrastructure built too close to the coast and in flood plains were particularly at risk.
"We're looking at the coastline, at areas around the Vaal Dam and there are parts of the West Coast which are a problem. Langebaan is a problem and so are parts of the Southern Cape.
"We're approaching this in a responsible way. It's not a case of turning around and saying 'we're not going to insure you', but the situation is going to get worse and we're going to have to re-rate those areas.
"It's a real problem; we're not just being alarmist. You can't keep passing the risk to the insurance company," Kirk said.
Although the study had not been completed, Santam had written to brokers and to some policy holders to inform them of the implications of the climate change risk study.
Kirk said municipalities that continued to allow housing and infrastructure to be built in flood plains and too close to rivers and the coast, were being irresponsible "because we're going to have to deny cover on that".
He was also critical of CEOs in South Africa for being unconcerned about climate change. He said a recent study showed that CEOs put climate change "right at the bottom" of a list of issues that concerned them.
"That worries me because if climate change is not a priority, risk management of climate change will not be a priority either.
"Businesses must assess their carbon footprints and take steps to reduce their footprints. And we need legislation around carbon emissions," Kirk said.