The company was developed by Kunene Makopo Risk Solutions in partnership with Afribiz Invest, and is underwritten by the Constantia Insurance Company.
Makopo says although RDP houses have been positive for society, communities are rife with stories about families who experience crippling financial strain after receiving their property.
“When beneficiaries of low-cost homes suddenly come across loss or damage to their properties, they face a heavy financial burden. Most RDP families don’t have access to spare money, so if something goes wrong with their new house, they can’t afford to fix it. And if you don’t maintain a property, more things tend to go wrong, so you end up in a negative cycle you can’t escape from,” adds Makopo.
He says the company has been developing the insurance product over the past six months. It will be officially launched on Wednesday.
“It’s a tailor-made scheme, which is rated differently from your conventional comprehensive insurance in order to accommodate the income group that is targeted for this cover,” says Makopo.
He says the company will be targeting 30 percent of the 1.1 million RDP houses built to date over the next 36 months. Makopo says Shic offers housing protection for R100 a month. RDP homeowners can now make sure that if they experience theft, fire or material building damage, they will be able to pay the cost of repairs.
He says the issue of low-quality RDP buildings is widely recognised across South Africa. “For example, Human Settlements Minister Nomaindia Mfeketo stated that the government had spent R1.1 billion over the previous five years to repair badly built RDP houses. Worryingly, this figure does not include costs from three key provinces, Gauteng, Mpumalanga and Northern Cape.
“The Shic offering is therefore a huge development for RDP families, especially since in 2019 many RDP houses continue to be built at a low structural standard,” says Makopo.
He says there are still many reports from low-cost home owners about poor quality houses with specific mention of weak walls and roofs.
“This is very unfortunate and can undermine the whole principle behind government subsidised housing. When a building is structurally weak to start with, it is vulnerable to natural forces like rain and wind. The weakness and vulnerability grow a hundred times when owners can’t afford to repair cracks, leaks and other kinds of damage,” says Makopo.
He says policyholders also have the option to take up additional affordable cover for household contents, as well as a funeral plan. “We’ve worked very hard to develop this product for South African communities. It services families that meet government’s criteria for social housing, as well as anyone else with a home valued under R150 000. The cost of the premium is as low as we could possibly make it. This has been a big point of focus for us, along with making sure the process of getting cover is simple and fast,” says Makopo.