As climate risks intensify, South Africa has joined the ranks of countries equipped with a national climate index – a data-driven tool that could help insurers, medical schemes, policymakers, and farming communities adapt to changing weather patterns.
Developed by a multi-disciplinary team of actuaries and meteorologists for the Actuarial Society of South Africa (ASSA), and funded by Old Mutual Insure, the ASSA Climate Index provides quarterly updates on the frequency of extreme weather events relative to a 30-year baseline (1991 to 2020). The index is publicly available and free to use.
A data tool for a changing climate
The index quantifies how often extreme weather events such as floods, droughts, heatwaves, and cold spells occur, and tracks whether their frequency is increasing. It integrates several components – high and low temperature occurrences, heavy rainfall, and drought severity – into a single composite score that provides a snapshot of South Africa’s climate extremes.
Professor Rendani Mbuvha, actuary and lead developer of the index, said the goal is to enable more informed risk management across multiple sectors. The data, he explained, can be used by insurers, medical schemes, policymakers, and researchers to understand climate trends and plan for their potential impacts.
He added that during the testing phase, the team compared the loss histories of two large short-term insurers with the index data, finding a direct correlation between extreme weather patterns and insured losses.
“These short-term insurers are now able to use the index to get an indication of whether there is an increase in the frequency of extreme weather events in specific parts of the country that are likely to result in future losses,” Mbuvha said. “Not only will this enable insurers to price future losses, but with this data, they will also be able to create awareness among communities most likely to be affected.”
Applications in health and agriculture
Mbuvha said the index could also yield valuable insights for medical schemes and health insurers by helping them to identify correlations between weather extremes and healthcare utilisation rates.
“Climate research in the field of healthcare is interesting and likely to render insights that could help improve healthcare for communities,” he commented.
Government departments, civil society organisations, and farming communities are likewise expected to benefit. For these groups, the index offers a way to monitor shifting weather patterns, anticipate extreme events, and mitigate losses.
A tool for resilience
Old Mutual Insure, which sponsored the index’s development, described it as a milestone for climate-conscious risk management in South Africa. Ricardo Govender, chief actuary at Old Mutual Insure, said data-driven intelligence is now a business imperative.
“The insurance industry sits at the front line of climate risk. We see first-hand how extreme weather events are affecting people, property, and livelihoods. To respond effectively, we need data that not only tells us what has happened in the past, but what and how things are changing,” he said.
Govender added that robust, transparent climate data empowers not only insurers but also governments and businesses to plan more effectively.
“This is not just about managing claims; it is about building a system that understands and manages climate risk holistically.”
Free and open access
The ASSA Climate Index is available online to all users at no cost, thanks to Old Mutual Insure’s funding. Mbuvha said this open-access approach is intended to encourage collaboration between sectors and support data-driven decision-making.
Both ASSA and Old Mutual Insure said the launch is only the beginning. Plans are under way to expand the index to include predictive scenarios and new indicators such as hail, wind, and fire-leading conditions, as well as broader regional coverage across Africa.
A foundation for climate-aware decision-making
With the World Meteorological Organisation declaring 2024 the hottest year on record, the launch of this index could not be timelier. It offers insurers, healthcare providers, farmers, and policymakers a scientific foundation for understanding and responding to climate change.
As Govender put it, “Our support for the Climate Index ensures that we are investing in a future where businesses, communities, and ecosystems can all thrive despite the challenges of climate change.”
Click here to access the ASSA Climate Index.
