New Insurance Insights Reveal Storms as Top Threat to South African Enterprises

According to a five-year insurance insights report from Standard Insurance Limited, extreme weather now outpaces theft and fire as leading business risk.

A newly released five-year insurance insights report from Standard Insurance Limited reveals a dramatic shift in South Africa’s business risk landscape: storms and other extreme weather events have overtaken theft, fire, and accidental damage as the leading cause of short-term insurance claims.

The report signals a new era of climate-linked volatility, where environmental shocks are no longer seasonal anomalies but systemic threats to business continuity and national economic stability.

“In 2022 alone, total claims peaked, with storm-related incidents making up a significant share. Storm-related claims accounted for 25% of all submissions,” says Riaz Mia, Chief Operating Officer at Standard Insurance Limited. “While fire incidents were less frequent, they carried the highest financial impact, with some commercial fire losses reaching up to R183 million.”

While it may be challenging to predict when extreme weather events will strike, regional data from Standard Insurance Limited show that the kind of climate events we are prone to experience, are increasingly patterned – from hailstorms in Gauteng to flooding in KwaZulu-Natal and wildfires in the Western Cape.

“As an insurer that advocates for business continuity, this report – produced in partnership with our Standard Bank Group climate and equity research teams – offers climate risk insights to help businesses prepare better, build resilience and ensure swift recovery in times of disaster,” explains Mia.

“We want businesses to see insurers as more than financial responders but rather as strategic partners in this evolving risk landscape. We are partners in protecting what matters most.”

Dr Penny Bryne, Head of Climate Change Research at Standard Bank Securities says that South Africa’s climate story is unfolding faster than many anticipated, and the insurance industry is feeling the effects in every claim cycle.

“The reality is that emissions are increasing, and global average temperatures alongside. As the world warms, extreme weather events become more frequent and intense,” Bryne explains. “As extreme events become more commonplace, we revisit the question of how the risks change and count the huge cost associated with these events.”

Head of Commercial Insurance at Standard Insurance Limited, Dini Nondumo says risk is no longer random. Businesses need to evolve from only thinking about insurance merely as a reactive safety net and more of a strategic partner that helps protect operations, infrastructure, and financial continuity.

The 2022 KZN floods alone caused R62.3 billion in losses, with only R32 billion insured. Over 31,000 jobs were lost, underscoring how uninsured shocks leave deep economic scars.

“Short-term insurance is emerging as a critical pillar of economic resilience as it injects liquidity, enables recovery, and restores investor confidence after shocks,” says Nondumo.

A R4.5 billion flood damage lawsuit, by one of the biggest motoring companies in South Africa, following municipal stormwater failures, highlights how poor infrastructure can turn insured events into uninsured crises.

Even businesses with robust insurance coverage can experience extended disruptions if public systems aren’t equally resilient. A truly secure future depends on the strength of every link in the chain.

Johan van Greuning, Head of Standard Insurance Limited, says that in a country where unemployment hovers around 33%, businesses are vital job creators.

“Yet, without insurance, a single fire or flood can mean permanent closure, triggering job losses and supply chain disruption,” says Greuning.

“Insurers cannot close the protection gap alone. Joint investments with government in infrastructure resilience, education, and inclusive insurance products are vital to safeguard business continuity and national stability.”

Standard Bank urges South African business leaders to integrate Short-term Insurance into strategic planning – conducting climate vulnerability assessments, reviewing policy adequacy, and using claims data to guide capital allocation.

The South African Prudential Authority (PA) has formally initiated the integration of climate-related risks into its regulatory and supervisory framework. In May 2024, the PA issued a guidance notice titled “Climate-related Governance and Risk Practices for Insurers”, outlining approaches insurers should adopt to manage climate-related exposures.

This marks a pivotal shift in how the industry must respond. The pace and unpredictability of climate-related events are challenging traditional actuarial models. If businesses underestimate their exposure, they risk catastrophic losses that could destabilise entire sectors.

Reinsurers play a vital role in this evolving landscape – offering capital, global insights, and technical expertise to help insurers navigate uncertainty and build resilience across portfolios.

Click here to read the full report...