Insurers reel under storm claims
Companies face paying out millions but circumspect on premiums hikes
SOUTH Africa’s short-term insurers‚ reeling with claims overload in the aftermath of last week’s two major storms‚ have not yet been willing to quantify the full extent of those claims. Old Mutual Insure reported that it had already received more than R15-million worth of claims since Wednesday.
By Friday‚ Outsurance had received 3 000 claims arising from last Monday’s Gauteng storm and 1 500 from clients affected by the KwaZulu-Natal storm the next day.
While many of those who have submitted claims should brace themselves for a premium increase‚ along with a sharp increase in the excess payable for flooding‚ short-term insurance policyholders across the board could end up paying for the monster storms in the form of higher premiums.
“There will be no immediate increase to any of our clients’ premiums‚” an Outsurance spokesman said.
“But at the client’s annual rerate‚ all claims that they experienced will be considered‚ along with many other factors‚ in determining their premium going forward.
“And an increase in reinsurance premiums would affect the entire book – but at this stage we don’t foresee a need for drastic premium increases.”
Most insurers take out reinsurance policies with international companies to mitigate their risk in the event of major catastrophes.
Auto & General spokesman Martin van Wyk said those who submitted stormrelated claims would not be hit with premium hikes. “Storms are an insurable event‚ directly in line with why we exist as a business‚” he said.
While premiums would not be increased across the board either‚ he said that if reinsurers took a view that there was an increasing trend in the occurrence and severity of these events‚ due to causes like global warming‚ then ultimately the increased cost of reinsurance would have to be absorbed in the premiums charged by the insurance industry.
Discovery Insure said none of its clients would have their premiums or excesses increased.
Old Mutual Insure’s Johan Welthagen said increases would be considered on a case-by-case basis.
“If someone has lived for years in a house that has withstood many storms without damage‚ but submitted a damage claim after one of [last] week’s storms‚ we are not going to penalise them‚” he said.
Santam’s risk services head, John Melville, said: “Catastrophes impact different policyholders at different times‚ and there is an element of chance involved. Those who were recently impacted would typically not be singled out for special increases.”
Regarding the possibility of a general increase‚ Melville said while it was likely that provision for catastrophes would lead to premium increases for significant numbers of policyholders‚ “the impact will vary depending on the exposure of the policyholder to losses from catastrophe events”.
As for the likelihood of excess increases for those who had submitted storm-related claims, he said this was possible “in exceptional situations”‚ but was unlikely to be the industry’s general response.
Meanwhile, damage to public buildings as a result of the storms and floods in KwaZulu-Natal and Gauteng last week was estimated at R16-million‚ Public Works Minister Nkosinathi Nhleko said yesterday.
“While the final cost is being quantified to inform the final assessment‚ repairs at some of the 30 properties in KwaZulu-Natal‚ ie 17 state-owned facilities occupied by South African Police Service‚ departments of Labour‚ Justice and Defence as well as 13 leased facilities has commenced‚” Nhleko said.
He said contractors were expected to be on site by the end of this week at all remaining sites after emergency procurement procedures and appointment of contractors had been finalised.
The minister said the ministers and members of executive councils meeting held on Friday had noted the leadership provided by the KwaZulu-Natal and Gauteng premiers and had expressed confidence that interventions aimed at mitigating the effect of the damage would minimise disruption to services.
The heroic action of ordinary citizens and humanitarian organisations following the storms had demonstrated Ubuntu‚ Nhleko said. – TimesLIVE