Cost of damages in millions

Myra Knoesen, FAnews Journalist

Over the years South African weather patterns have increased in severity and weather-related damages have cost, and continue to cost, the insurance industry billions in losses as insurance claims pour in. With this worrying trend FAnews spoke to Bryte, Old Mutual Insure and Santam about the issues particularly relating to the Johannesburg and KwaZulu Natal storms, the estimated flood claims, pay-outs, statistics and damages in costs and what the concerns are for 2018.

According to Reynier Rautenbach, Head of Claims Operations at Bryte, the storm damage affected Gauteng and KwaZulu Natal most severely. The majority of the damage in Gauteng relates to hail with flood damage being the primary cause of loss in KwaZulu Natal.

“Claim volumes and costs quoted are subject to change as additional information is obtained. The claims related to the event can be summarised as follows: Gauteng 135 claims with damages estimated at R25 million and KwaZulu Natal 183 claims, with damages estimated at R115 million,” says Rautenbach.

Johan Welthagen, Old Mutual Insure’s Head of Claims Support says Old Mutual Insure has already received claims in the tens of millions of Rands from the Gauteng and KwaZulu Natal storms and this number can still increase as more claims come in. 

Santam was processing more than 4 000 claims resulting from flooding in Durban and the hailstorm in Gauteng. Ebrahim Asmal, Santam’s Executive Head of Claims and Group Sourcing says, “In both Durban and the affected cities in Gauteng, the majority of the claims are for non-motor items such as damages to homes and the contents of homes and businesses. In Gauteng, our non-motor claims include a few large agriculture and commercial entities that were affected by the tornado and hail storm.” Santam was also processing more than 1 000 vehicle claims following the hail storm in Gauteng specifically. 

Last year, Santam, paid out R500 million in claims resulting from catastrophe events such as flash floods and hail storms. “In the six months to June 2017, we processed R800 million in claims resulting from a storm in the Western Cape and fires in the Southern and Eastern Cape,” continues Asmal. 

Concerns for 2018

“Extreme weather events are increasing in intensity and occurrence as predicted by climate change science and the rising urbanisation patterns of South Africa. This poses serious risks to the stability and quality of human society as well as global economy, and insurers are strong advocates of the need to build local level resilience and risk protection,” said Asmal. 

Santam’s Agricultural Meteorologist, Johan van den Berg says the early to mid-summer months in South Africa are known for variable and unstable weather patterns. “The combination of cold upper air conditions remaining from winter and tropical moisture from summer systems are usually a recipe for stormy weather.” 

Van den Berg says historical records show that at least 24 hail events described as “disasters” occurred between 1900 and 1990 in Gauteng, amounting to an average of one disaster hail event every three years.

“Going into 2018, fluctuating weather patterns may result in current local weather patterns being even more erratic. For example, an area which experiences high rainfall may be subjected to even more rainfall. Drought-ridden areas, typically, carry high volumes of dead vegetation which fuel fires. The effects can therefore be quite severe. The Knysna Fires are testament to this,” says Rautenbach.

“Low lying areas will always be prone to flooding when excessive rainfall is experienced in a short period of time. Simply put, if the rate of in-flow of water in an area exceeds the rate of out-flow, flooding will occur. Mitigating this risk, especially in urban areas where infrastructure is either old or not easily upgradable, continues to be a challenge. Although the threats are not new, a proactive approach to managing the impact will result in a reduced threat to the customer and the industry. With reference to fire events, fire prevention techniques can significantly mitigate this risk,” continued Rautenbach. 

Welthagen agrees that the frequency and severity of storms have definitely increased over the last decade. “Most insurers have a catastrophe plan in place on how to deal with these, effectively and efficiently. It definitely seems to have become the norm.” 

Making things easier

“In order to make the claims process easier, we have triggered our claims CAT Plan which means that we have a dedicated claims team in place to manage the storm claims. We proactively implemented overtime in September to create claims handling capacity should a CAT Event occur. This foresight has placed us in an excellent position to ensure that our usual high levels of service to brokers and customers continue. Emergency assessment centres were also activated in Gauteng and KZN to ensure efficient assessment of hail and storm damage,” concluded Rautenbach. 

Welthagen mentions that Old Mutual Insure has put additional measures and resources in place to enable the company to deal with the expected high volumes of claims and to enable its customers to register related claims as quickly as possible. 

“For our Johannesburg customers that suffered from extensive hail damage we have set up dedicated repair workshops in conjunction with our service providers to enable vehicle claims for hail damage to receive immediate assistance. For our Durban customers that have suffered damages from the latest flooding, we have extended our front office hours and set up a 24 hour contact number to report emergencies,” said Welthagen. 

“The moment we classify a claims event as a catastrophe, we activate our plan which is fully operational within 48 hours. Additional assessment resources have already been seconded to the affected areas and will be supplemented by more assessors this week. We’re still assisting our clients to avoid any further damage to their properties and helping them to ensure that they can get their lives back to normal as soon as possible,” says Asmal, adding that the Santam claims team was also still managing claims received from heavy storms in KwaZulu-Natal and hail storms in Mpumalanga in the past three weeks. 

Editor’s Thoughts:
It is clear that the risk management landscape is changing and needs revised thinking. And now, more than ever, risk management strategies to assess and control risks need to be at the front for brokers and insurers to actively advise clients of the potential and changing threats. Do you agree with this? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za