Standard Bank South Africa's insurance division has experienced a 402% increase in storm-related damage claims during March 2014 following unusually high rainfall during the month that caused flooding across five of South Africa's nine provinces.
Torrential rainfall in North West, Limpopo, Mpumalanga, Gauteng and KwaZulu-Natal has washed away roads and bridges, damaged homes and opened up as many as 13 000 potholes in the streets of Johannesburg alone.
"This will be remembered as one of the wettest months on record and has resulted in severe storm-related damage across the country," said Ms Denise Shaw, Head of Standard Bank Insurance Services.
South African Weather Service data shows that Johannesburg, South Africa's biggest city, recorded more than double its long-term 101mm average annual rainfall during March. The same data shows that Pretoria, South Africa's capital city, experienced its wettest March for 17 years.
At the same time, Standard Bank South Africa has experienced growth of 16% in insurance claims related to irrigation pipe damage along with a 5% jump in geyser related claims, compared to March last year. In addition, total insurance claims for March 2014 increased by 56%, compared to the amount of claims received in March 2013, driven largely by the surge in storm-related damage.
"One of the unfortunate consequences of such unusually high rainfall is that it increases uncertainty when compiling insurance policies. The industry may need to consider the increased insurance risk associated with unpredictable weather patterns, and the impact this has on accurately formulating policies," says Ms Shaw.
South Africa is not the only country to have experienced a spike in insurance claims prompted by unusually severe weather patterns. Using data supplied by the Association of British Insurers, consulting firm Deloitte found that weather-related insurance claims in the UK reached a 10-year high in the final quarter of 2013 as flooding wreaked havoc across Britain. Similarly, the Insurance Bureau of Canada said in January that severe ice storms in the country pushed insurance claims to a record high of $3.2-billion."While it is likely that insurance premiums would increase during times of highly unpredictable storm activity and related damage, one needs to consider how much higher the personal cost would be without insurance," said Ms Shaw.
"Under-insuring on your home or other valuable possessions in order to lower your monthly insurance premiums might save you money in the short-term, but it could end up losing you a substantial amount in the long run should you suffer the effects of a severe weather event.
"Standard Bank Insurance Services has been offering hassle-free insurance products and services since1984, typically paying out claims of nearly R1-billion a year alone on life and short term policies. Standard Bank South Africa has more than four-million policies on its books, offering the full suite of cover with its own short-term insurance license.
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