27 October 2022
ECONOMIC IMPACT OF DISASTERS
The past two years has seen severe fires, looting and the KZN Floods (which has officially been recorded as the worst natural disaster in the history of South Africa). These disasters, in addition to the impacts of COVID-19 and other international events, have had a negative effect on the economy. The effects include the increased cost of parts and importing, shortages of goods and delays in the supply chain globally.
RECORD HIGH INSURANCE CLAIM SETTLEMENTS
This has caused Insurance companies to pay record high claim settlements, both in the value and quality of claims. There have been severe knock-on effects along the way – for example: the global delays on sourcing of parts have even led to increased Car Hire claims, for insurers, as policy holders wait longer than usual for their vehicle repairs.
In the past financial year:
- Santam Insurance paid over R24.5 Billion in claims
- Old Mutual Insure paid over R21.2 Billion in claims
- SASRIA has paid out R24 Billion in claims (this is just 80% of claims finalized)
Despite the above, most insurers have provided policy holders with record-low renewal increases and premium relief.
HIGHER INCREASES TO BE EXPECTED
Considering this and the continued rising costs of repairs and replacements, we can expect to see premiums and excess structures increase in the coming months.
Insurers are giving the heads-up that many policy holders will see double digit premium increases. Finesse has already seen this in the renewals we are receiving for November and December. Where policy holders have high loss ratios, rates are be harder to negotiate down.
SASRIA INCREASES
Further to this, SASRIA (South African Special Risks Insurance Association) has paid out record figures which has resulted in their across-the-board increases in their rates – not only to factor for past claims but in preparation for future claims for further possible unrest and continued climate change.
SASRIA premiums are fixed rates set by SASRIA and will be the same, regardless of your insurer. Some insurance policies allow you to exclude SASRIA cover, although we do not recommend this.
