SOUTH AFRICA: Insurance claims flood in part of Johanneesburg

South Africa’s largest short-term insurers worked around the clock on Thursday, processing hundreds of claims arising from floods in parts of Johannesburg that left at least six people dead.

Mutual & Federal expected claims in excess of R100m,
which amounted to about a quarter of total claims received in an average month, said head of claims, Michelle van Staden.
By Thursday morning, Mutual & Federal had registered more than 80 claims at a value of about R13m, she said.

Outsurance and Santam had registered 800 and 238 claims respectively on Thursday, while MiWay said claims were running into the hundreds.
The exact cost of these claims is unclear, but it is unlikely it will equal that of hailstorms from previous years.
In November 2013, hailstorms cost the short-term insurance industry more than R2bn, according to PwC. One storm alone, on November 27, amounted to R1.6bn in claims.
Outsurance paid R239m in gross claims from weather-related catastrophes in the second half of 2013, while the hailstorm of November 27 cost Santam R225m.

 

The insurer, which is majority-owned by Sanlam, is the country’s largest short-term insurer by gross written premiums, with a 24% market share, according to the most recent figures from KPMG.
Hollard (11%), Mutual & Federal (10%) and Outsurance (7%) are the next largest.
Hollard had not seen a drastic spike in claims following the floods, said spokesman Warwick Bloom.
Mutual & Federal’s claims were mostly for households and businesses, but Van Staden expected vehicle claims to begin trickling through in the next few days. "People are more concerned when their home gets damaged and call urgently."
While insurers would cover so-called "acts of God", such as floods, policyholders needed to recognise the difference between maintenance-and weather-related claims, particularly on property damage, Van Staden said.

"What we often find in these circumstances is that people don’t have their homes in good repair and the damage [sustained] is not because of the storm but due to poor maintenance," she said.
Insurers could repudiate claims in such circumstances.
SA’s insurance industry was well capitalised and this catastrophe was well within its ability to manage, Van Staden said.
What was of more concern was that only about 30% of cars in SA were insured, meaning most drivers affected by the floods were not covered, she said. "Given how [financially] stressed consumers are, this will have a severe impact on their financial situation."

 

by Hanna Ziady/BDlive