Insurance claims and pay-outs soar as climate change wreaks havoc in the form of devastating storms.
As the effects of climate change are becoming self-evident, the impact on our local insurance industry is significant. In March of this year, a series of hailstorms in the late summer saw massive hailstones hammering down on people’s cars and homes. During this time, insurers received thousands of claims for hail damage to cars and homes in Gauteng alone during a 48-hour period, bringing the costs to millions of Rand.
At a climate change conference in Sandton earlier this year it was mentioned that climate change was the cause of the damaging hailstorms. The city is an average if 0,8 degrees warmer and could be up to 6 degrees warmer by 2050. This would have a hugely damaging effect on not only property but also the general lifestyle of the people that live in Johannesburg, due to the increase of the storm frequency.
Research published in the journal Nature last year stated climate change costs the world economy $1.2-trillion a year. Loss of productivity and damage to property was the main part of this, with the insurance industry having to pick up the tab. This has prompted Lloyds, the largest and oldest insurance market in the world, to call on insurers to include climate change in their projections. Most insurers were investing in the future without factoring in climate change, it said. The South African Insurance Association said the impact of climate change on the local industry was starting to become significant.
The insurance industry received 56% more claims this March than for March last year. All this damage will have to be covered by the industry and it is possible that they will have to raise premiums and excesses. This is directly attributable to the high incidence of weather-related claims.
With the summer heat approaching and the likelihood of storms on the increase, it is essential that people are adequately insured. Hailstones as big as 5cm in diameter are now a common occurrence, and something that could cause irreparable damage to cars. It is therefore essential that home and car owners check their policies and speak to their brokers to ensure they are adequately covered this season. It’s also prudent to keep a large, thick blanket in your boot, just in case you cannot get under cover quick enough during storm.