Severe storms hit Gauteng and Kwa-Zulu Natal last week with devastating effects, damaging several buildings and property. Global weather patterns are becoming more unpredictable as a result of global warming.
Recent high-level hurricane systems caused mayhem throughout the Caribbean and southern states of the USA. Even Ireland was recently hit by a hurricane system for the first time in living memory. Most of the cost to repair or reinstate the damaged buildings are borne by insurance companies which runs into billions, if not trillions, of dollars globally.
Impact of global events
While South African insurers are largely protected from the extent of damages caused by multiple hurricane systems, the SA insurance market’s profit margins are likely to be affected by the latest global claimable events. Although most local insurers try to keep premium rates down, the premium risk ratings for high-risk areas and buildings are most likely to be increased in the medium term. This may be due to specific trends, or where certain geographical areas reflect higher incidents or greater losses due to storm weather events.
Reinsurers
What is not immediately clear is the final impact of these global claims on the large reinsurers. Most local insurers re-insure themselves for catastrophic losses by acquiring cover from the large global reinsurance companies. The impact of the latest catastrophic damage claims on the reinsurers will inevitably lead to increased premiums for our local insurers, which will be passed on to the insured client.
Author: Brian Addison
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