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Budget 2024: Standard Bank Insurance welcomes efforts to raise natural disaster funds

27 February 2024 Standard Bank

Standard Bank Insurance applauds Finance Minister Enoch Godongwana's announcement that government has so far raised US$3.3 billion (R62 billion) from Multilateral Development Banks and International Finance Institutions to support climate change, energy, and just transition objectives during the tabling of the nation's budget speech on Wednesday.

The minister added that government is working with eight municipalities to adapt and mitigate the effects of climate and weather-related events, by providing technical assistance for climate-responsive capital projects.

"While the insurance industry plays a critical role in helping individuals, businesses, communities and the greater economy recovery after climate-related disasters, the reality is that extreme weather events are only intensifying and will therefore require greater collaboration between individuals, the public and private sector in order to mitigate the damage and losses to our economies," says Robert Shaddock of Standard Bank Insurance.

Shaddock adds that although businesses with insurance may be able to recover from climate-related disasters, it is critical that infrastructure and roads are repaired promptly. As such, it is imperative that municipalities receive sufficient support in order to increase their capacity to withstand and recover from these events.

“For example, if we look at tourism, hotels might be able to bounce back, but if the roads that lead to those hotels aren't fixed, their business will continue to be vulnerable, and the community will suffer more because this could result in significant job losses,” adds Shaddock.

According to data provided by non-life insurance companies who participate in the Insurance Data System (IDS) of the South African Insurance Association (SAIA), South African insurers paid out about R35 million in claims in November of 2023 for the damage caused by storm, lightning, hail and wind damage due to extreme weather events. Meanwhile, a 2023 Weather, Climate and Catastrophe report identified flooding as the second-largest peril across the globe and the most prevalent peril on the African Continent. The KwaZulu-Natal floods of April 2022 were noted as the largest flooding event on the continent with an economic loss of R64 billion and the costliest event for the national insurance industry on record. A notable concern is that only 18% of the economic losses were insured.

Shaddock says that the National Treasury's initiative to increase development finance for climate risk prevention and mitigation will allow for communities to recover faster from climate-related disasters and stem economic losses to the Continent.

Standard Bank Insurance remains very focused on raising awareness of the actions that companies can take to reduce the risk of climate-related asset damage.

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