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Catastrophe
Saturday, December 1, 2012
Hail and brimstone…

 

Little more than two weeks after a devastating hail storm hit Johannesburg’s suburbs with golf ball-sized hail stones, a second freak storm has caused severe damage in suburbs in Gauteng.
According to reports, the first storm on 22nd October saw as many as 25 000 claims pouring in to the insurance industry as a whole. Payments were expected to reach R1 billion. Thirteen people were killed.
“In the later storm on Thursday 8th November 2012, consumers were once again left counting the costs of damage after a second severe hail storm hit the East and West Rand. Suburbs were left without electricity, roofs were damaged and in some instances pulled right off; vehicles and windscreens were smashed, gardens were destroyed and homes and buildings were left battered,” says Mandy Barrett of Aon South Africa.
While insurers are still reeling from the backlog of claims that need to be processed from the first storm, windscreen suppliers, panel beaters, plumbers and home maintenance crews are frantically trying to cope with the demand for repairs. The double-hit will definitely be leaving many people frustrated and out of pocket. Insurer loss ratios have also been hard hit so consumers can expect that underwriters will be reviewing covers across the board and rates will most likely harden.
“Over the last two to three years the country has suffered the effects of extreme weather on a more regular basis. But in South Africa there is a misplaced view that extreme weather disasters happen a long way from home, that we are in a geologically safe zone and are not as vulnerable as other regions or countries. As a result, we are seeing highly conservative approaches adopted by many consumers who cut their cover on the flawed premise that certain low probability events are simply too unlikely to happen. The problem when such disasters do strike is that they find themselves woefully underinsured, and as a result will be seriously financially compromised,” explains Barrett.
“One of the most important things consumers can take out of the recent weather catastrophes is to assess whether they are properly covered for worst case scenarios. We are far from immune to such perils as the recent spate of storms and floods have reminded us and it’s important to know that adequate insurance cover is arranged.
“A professional broker plays an invaluable role in managing and helping you mitigate your risk, and in turn managing your premium costs.”
Your broker should be able to help you arrange insurance to meet your specific needs, and to ensure that, on the one hand, every eventuality is anticipated, while on the other doing so for the best possible premium rate.
In another area where claims were pouring in extensive flooding displaced over 2 000 people in the Eastern Cape and caused severe infrastructure damages amounting to millions of rands in damages, such as the 25 metre wide and 50 metre deep sink hole on the N2 between Port Elizabeth and Grahamstown (October 24th). The total cost of damages could reach over a billion rand and may even surpass that of 2011, which was reported to be the costliest year for natural disasters in South Africa’s recorded history, with economic losses amounting to over R160 billion due to flooding alone.
According to Anwa Adams, Manager: Corporate Sales at Lion of Africa Insurance, the most common risks for corporates include loss or damage to the insured’s property caused by fire, storm, wind, water, and earthquake. There are, of course, potential business Interruption losses that need to be considered in structuring adequate insurance cover, in addition to possible theft of stock, money, goods in transit; employee and director liability, personal accidents, crime and machinery breakdown.
“It is not possible to predict when catastrophe might strike, of course, but it is too late to react once they have occurred. With the correct levels of protection in place, businesses can ensure that financial losses from catastrophes and businesses interruptions are mitigated,” he says.
 

Copyright © Insurance Times and Investments® Vol:25.12 1st December, 2012
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