While we are going through tough economic times, it surprises me that policyholders may be looking at insurance as a grudge purchase.
We should constantly touch base with clients and remind them that unforeseen events do happen. Protection against this is where the true value of insurance lies.
A walk on the wild side
A number of events highlighted this idiom over the past year.
The first event was the recent student uprising over access to tertiary education. This is the second year of the FeesMustFall campaign and is most definitely the most violent. Frustrated students have taken to the streets on a number of occasions venting their anger and engaging in running battles with police and private security.
Its hard to believe who is telling the truth in these situations; but one thing is for certain, the damage caused by these protests will be costly.
In a report on Independent Online, Stan Henkeman, Executive Director of the Institute for Justice and Reconciliation, said the current damage assessment of the FeesMustFall protests may be more than R750 million.
This figure is obviously not finalised and can only be calculated by Sasria as the claims flood onto desks at the state insurer. This figure is only likely to be finalised by the end of the first quarter of 2017.
However, we can look at what occurred during last year’s FeesMustFall protest. According to the 2016 Sasria Annual Report, there was an increase in severity of student protests claims from 3% to 18%. The biggest claim received by Sasria was valued at R103 million.
This not only shows the value of having Sasria cover, but it shows in some cases that clients, in consultation with their brokers, need to have a relook at their Sasria cover to make sure that they have enough.
Rushing waters
South Africa has been in the grips of one of the worst droughts experienced in the past fifty years and more than a few people have sent up urgent prayers for desperately needed rains.
Nobody was prepared for what happened in the East of Gauteng on 9 November when the proverbial heavens opened up and provided enough rain to cause a flash flood in the area.
The East Rand has been declared a natural catastrophe zone by insurers after heavy rainfalls and flash floods caused extensive damage to vehicles and property in the vicinity of Linksfield and the Gilloolys interchange.
The flood of claims
In a release to the media, Mandy Barrett – Manager of Personal Lines Marketing & Sales at Aon South Africa – said that as at lunchtime on 10 November over 150 claims had already been lodged in Aon’s call centre alone, and continue to pour in.
“Some insurers have set up facilities at salvage yards for vehicles that were submerged to be immediately assessed. Huge property losses have also been incurred, especially in the vicinity of the Jukskei River which burst its banks. While it’s still too early to quantify the extent of the damage today, expectations are that these will be significant and that claims handling will be kicked into high gear to deal with the influx,” says Barrett.
The concentrated hub
According to Aon South Africa, weather-related damage has cost the insurance industry a staggering R2.5billion in losses in the last four years.
While severe weather is not an uncommon occurrence in South Africa, what makes the events in BREAK Gauteng particularly noteworthy is the net retained exposure that the province represents. Gauteng’s built-up area constitutes only 0.5% of SA’s land surface area, but due to the fact that the area is so densely populated, Gauteng constitutes 35% of the exposure to catastrophic events such as hail storms and flash floods.
The dry side of the coin
This doesn’t mean we have gotten over the drought. A report by Independent Online showed that commercial farmers struggling to stay afloat in the face of a devastating drought are now auctioning off their livestock. Agricultural unions said the farmers in the Western Cape, North West and Free State were among the worst affected.
The drought has already hit home, with consumers feeling the pinch of the increase in the price of staple foods such as maize, beans and milk. Agricultural unions are in discussions with the government on how to reduce the impact, maximise profits and ultimately save jobs on their farms.
In February, Gordhan allocated R15 billion over the next three years to the Land Bank’s concessionary loan facility to help farmers recover from the severe drought, but this was said to be a drop in the ocean by commercial farmers.
Editor’s Thoughts
When we are faced with these examples of unexpected perils, how can we question the value of insurance? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
Comments
Added by Jerome Schofield, 21 Nov 20161) Storm/flood damage claims being rejected because a home was not built according to the National Building Regulations or a home extension is not on municipal plans.
2) Sasria rejecting a claim for looting because it is "burglary on a grand scale". Report Abuse