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Covid’s a wave, climate change a tsunami

13. August 2021 esbrokers (0)



The insurance industry has responded robustly to the Covid-19 pandemic and it needs to meet the climate change challenge similarly. 

There’s consensus in the scientific community that the climate is changing and global temperatures are rising. Though individual weather events cannot be attributed directly to climate change, the overall trends point to an increase in both global temperatures and extreme weather events. Climate change has already caused the earth’s temperature to rise by more than 1 degree above pre-industrial levels.  

There is clear evidence that climate change is causing more frequent severe weather events, from floods to fires to droughts, leading to higher and more volatile weather-related insurance claims. We are seeing this trend in our statistics. We’ve had more frequent floods and fires, especially in the last 10 years, with the Knysna fires in 2017 being our worst ever weather catastrophe, as well as several floods and hail storms over the past 3 years in KZN, Gauteng, and Limpopo. Not to mention severe drought and the threat of “Day Zero” in Cape Town in 2018/19. We see this trend even more alarmingly on a global scale, for example, recent wildfires and severe weather events in Australia and California.




Risks to the insurance industry

In South Africa, physical losses are exacerbated by declining infrastructure in municipalities. Inadequately equipped fire brigades and poorly maintained stormwater drains.

The greatest risk is that the insurance industry won’t be able to keep up with increasing weather claims; insurance premiums will spiral; we may need to remove/reduce cover in some areas. This is already happening on a wider scale in the US and France, where the government is needing to step in with special catastrophe insurance pools. We believe we have a responsibility to help our customers and communities reduce the impact of climate change, and to underwrite responsibly.



We must respond 

The insurance industry has responded robustly to the Covid-19 pandemic and it needs to meet the climate change challenge similarly. The industry needs to have the relevant infrastructure in place to measure climate change and manage its impact. To achieve this, data is key. 

Here are the key data sets we need and how we should make use of these sets. 

  • Accurate data on our existing exposures and their location
  • Data and models on the impact of climate perils by location
  • We need to understand which properties we insure in coastal areas and which of those areas are at the highest risk of flooding, as well as how that flood risk will increase over time, and possibly destroy infrastructure and interrupt business
  • Despite historical data, a lot of climate science research and expert judgement will be required to capture the possible future impacts of climate change
  • We must run comprehensive scenario tests to understand and plan for the impact of climate change

In addition to managing climate risk, we need to look at our responsibilities to society. We need to make responsible decisions about the carbon footprint of our building and staff. For example, the Old Mutual Group has installed greywater systems, light sensors, solar panels, and recycling in many of our buildings. We are encouraging all our staff to do what they can in their homes through staff campaigns to “Save our Planet”.

We are also adapting our investment philosophy to be more environmentally friendly. Th Group has made investments of R34.5 billion towards clean energy projects across Africa and developmental assistance to vulnerable areas most affected by climate change. We are formalising this commitment by launching our Initial Public Coal position this year. 

The Covid-19 pandemic has given us a rare opportunity to recalibrate our priorities and reconsider our possibilities. We have learned from the current crisis that concerted action can make a real difference.




Photo’s by Pixabay
Article By Lisa Pines, Old Mutual Insure, Chief Actuary


Homeowner’s or Household Insurance

13. August 2021 esbrokers (0)



Homeowners’ insurance, also sometimes referred to as ‘building insurance’, provides cover in the event of damage to your home’s physical structure. This insurance is in respect of the bricks and mortar, roof, windows and the like of your home.  Homeowners’ insurance, as the name implies, is available to an owner of the property and would generally not be available to a tenant. The insurance is obtained to provide cover for the owner should the building be damaged as a result of certain types of unforeseeable events, such as fires, floods, torrential rain and malicious damage to the property, amongst others.

So why is your bondholder (usually a bank) interested in the insurance details? If a property has been bonded, it means that the bank’s security for the loan it made to the owner lies with the property and the buildings thereon. Therefore, in many instances, it is a bond requirement that the property must at all times be sufficiently insured to protect the security of the bondholder.



In sectional title schemes, it is the body corporate that is responsible to ensure that the buildings in the scheme are sufficiently insured.  Owners of units in the scheme will note that the insurance premium is included in their monthly levy contribution.



Household insurance, or contents insurance, on the other hand, covers the household goods that are not covered by homeowners’ insurance. This includes furniture, electronics, clothing and even valuables such as art and jewellery. Due to the myriad of contents in a home, household insurance usually requires that a detailed inventory and value of items to be included in the cover, is provided. Certain high value items may have to be itemised and insured separately.  This type of insurance is not a legal requirement, but highly recommended to tenants and owners alike.


Photo’s by Pixabay
Article by STBB