Western Cape flooding - A social catastrophe

The recent floods in the Western Cape have proved to be a social disaster, as many of those worst hit are uninsured and will therefore be unable to recover their losses.

This is according to Adam Samie, Chief Executive Officer at Lion of Africa Insurance, who says that damages caused by floods could easily run into millions of Rands in damages. “While we cannot prevent natural disasters from occurring, it is possible for those living in high risk areas to minimise their impact by taking adequate financial and practical precautions,” says Samie.

Latest reports estimate that over the past weekend the disaster response teams have had to assist 2566 people in the flood-stricken areas with social relief and 60 people had to be evacuated from a golf and conference center in Cape Town due to rising water levels. Further to this, the city also attended to 839 instances of drains that were blocked and sewer systems and electricity services have had to deal with 1545 calls.

“Sadly, those hardest hit by the floods live in outlying areas in informal housing, many of which do not have access to the required insurance information products.”

According to Samie, the floods have highlighted the need for the local insurance industry to do more to educate consumers about the risks of being either uninsured or underinsured, as well as ensuring a broader range of people who have access to affordable risk products. “When it comes to financial education, much of the focus by business and government tends to be on encouraging people to save more. However, in many instances, protecting your assets is as important as growing them.”

Samie says South Africans actually get good value from their insurance when it comes to incidents such as flooding. “We live in a relatively benign climate so policies tend to contain little or no weather related restrictions. As a result, most people are able to buy one insurance policy that provides comprehensive cover, including for losses caused by events such as flooding.

“In many other countries this is not the case. For example, homeowners in California would have to buy more than one policy, such as taking out separate earthquake cover. In Europe, we also find that insurers often specify the extent of the cover by the distance to the river and the height of the building above a particular flood line.”

However, he says for South Africans based at or near flood-prone areas, such as those living along the Vaal river, it is increasingly likely that they may find their insurers starting to include certain restrictions in their policies, or increasing the premium for those living in areas most likely to be affected.

Samie says it is vital for these consumers to find out their flood line status. “A flood line is a measure of the highest level water has risen to in a five, 10 or 20 year period in a particular area. As a result, it is important for all who could be affected to find out what their flood line is and to ensure that they take simple steps to minimise any potential impact.” For example, particular items of value in a home should not be kept below that flood line and one should also try to avoid any type of design or innovation that would require excavation on the property that would then take the property even further down the flood line.