Regan Duarte
Climate change has been debated since the 70’s, but evidence has become increasingly apparent over the last two decades.
South Africa is not exempt from this phenomenon and the country continues to experience significant changes in its weather patterns. In 2022, days of heavy rainfall in KwaZulu-Natal (KZN) led to the deadliest storm in the country since the 1987 floods, accounting for more than R17 billion in damages to critical infrastructure.
Regan Duarte, Claims Specialist at SHA Risk Specialists, says South African businesses must consider whether they are sufficiently protected against the far-reaching consequences of climate change. “Professionals and building owners need to plan for a worst-case scenario and not the predicted rain patterns from 30 years ago. The flood modelling should be updated for what transpired in KZN.”
Poor maintenance and outdated planning put infrastructure at risk
The heavy rainfall and catastrophic flooding in the last few years that led to the collapse of infrastructure – most noticeably in KZN and the Eastern Cape – highlights the vulnerability of these structures. Poor maintenance like clogged storm water systems also played a key role in the failure to abate excessive flooding. Other provinces, such as the Western Cape and Gauteng, suffered similar, albeit less, severe flood damage with the Western Cape racking up over R1.8 billion just in damages to roads.
Operational and supply chain disruption, damaged infrastructure and loss of income are some of the significant challenges businesses face due to intensified weather events. “It is imperative that the private sector adapts to these changes and takes proactive measures to ensure economic survival,” says Duarte
SHA claims statistics from 2022 indicate most flood-related claims were from the KZN region (65%), followed by 35% from Gauteng and the balance between the Eastern Cape and Western Cape – revealing that certain regions are more susceptible to flooding and therefore require suitable urban planning and infrastructure to mitigate flood risks.
Incorporating the prospect of unusually heavy rainfall and flooding that a region may experience into the planning and risk management – which includes taking out the proper insurance cover – is crucial for industries to mitigate the impact of such events and ensure business continuity. Material Damage, Business Interruption, and Contractors All Risk are examples of cover that is essential for mitigating financial losses and safeguarding continuity.
Claims reveal vulnerabilities in cover
Looking at the construction industry in particular, the reasons for claims vary from defective designs, ineffective planning and preparation to commercial property claims against the landlord or managing agent for lack of maintenance. “Insurers cannot be held liable for willful negligence which is why most policies require that certain measures are in place to mitigate these risks,” explains Duarte.
SHA’s data reveals several claims against the professional teams appointed on construction projects wherein there are allegations of insufficient application of waterproofing to the roof and inadequate drainage systems which lead to damage to property of the tenants and other parties.
“Liability or Professional Indemnity cover is also crucial to manage risks and focus on recovery,” Duarte adds. “The worst situation for any business already dealing with its own losses, is to face litigation for third party damages or injuries. These claims are not only time consuming and stressful but can have significant financial implications.”
Acclimating to a new risk environment
Given recent extreme weather events both locally and globally, it’s hard to deny the need for business and property owners to take precautionary measures that will safeguard their buildings or construction plans against severe weather.
Brokers can provide expert advice specifically suited to a business’ needs, identify any coverage gaps, and recommend the appropriate insurance policies within the context of the current risk climate. This proactive approach would substantially improve business resilience and the ability to recover from unforeseen major losses “Consult your broker to ensure your business is adequately prepared for current environmental threats and properly insured against relevant risks,” concludes Duarte.
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