Losses in Gauteng from adverse climate change

Insurance Times – Tuesday, January 13, 2015 – 11:17

Losses in Gauteng from adverse climate change Pay-outs soar

The short term insurance industry is suffering a persistent trend in rising weather-related claims in the face of climate change. And it is particularly evident from claims experience in Gauteng in 2014. Last year a series of storms in the late summer (March) saw massive hailstones hammering down on people’s cars and homes. During this time, insurers received thousands of claims in Gauteng during a 48-hour period, bringing the costs to millions of rands. Johannesburg mayor Parks Tau said at a climate change conference in Sandton last year that, “We are seeing a clear shift in our summer season in Johannesburg, where it lasts longer and we get more frequent and damaging storms.” The city is 0.8˚C warmer than half a decade ago, with predictions that it will be up to 6˚C warmer by the middle of the century. Peter Olyott of Indwe Risk Services notes that this will clearly herald even more severe and prolonged storms, and a greater frequency of hail and lightning. Research published in the journal Nature in 2013 indicated that climate change was costing 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 for March 2014 than for the same month the previous year, for example. All this damage will have to be covered by the industry and it is possible that it will have to raise premiums and excess fees to do so. Olyott explains, “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 in Gauteng, it is essential that people are adequately insured. “Hailstones as big as 5cm in diameter are now common, and cause irreparable damage to cars,” adds Olyott. “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.”