Insurance update on KZN floods

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The South African Insurance Association (SAIA) says the damage to infrastructure in KwaZulu-Natal as a result of the floods already exceeds R1.1 billion, which was the estimated cost of damage after the flash floods in the province in 2019.

In a statement, SAIA said the devastation and loss of lives make this month’s floods the worst natural disaster to hit South Africa.

On Monday, President Cyril Ramaphosa announced that a national state of disaster has been declared in the wake of the floods that have claimed the lives of more than 440 people.

Nearly 4 000 homes have been destroyed and about 40 000 people have been displaced. Critical infrastructure, including the Port of Durban, schools, courts and police stations, have been affected.

The floods come less than 10 months after KwaZulu-Natal and Gauteng experienced more than R50 billion in economic fallout after businesses were looted and damaged during the riots in July last year.

Moonstone this week asked South Africa’s biggest short-term insurer, Santam, for preliminary claims estimates from the floods but was told these would only be released later.

‘Tip of the iceberg’

Old Mutual Insure had received more than R245 million in flood-related claims by 14 April. The more than 720 claims included homeowner’s insurance, motor claims and commercial claims and speciality claims for equipment, shipping and maritime infrastructure.

“While this is a significant indication of the scale of the damage, this is more than likely only the tip of the iceberg,” said Old Mutual Insure’s head of retail, Soul Abraham.

Abraham said this is “already the biggest natural disaster to have happened to the insurance industry following the Knysna fires in 2017”, where the total damage was R7bn for the entire insurance industry.

“We are seeing a significant increase in weather-related losses in recent times and expect changing weather patterns and climate change to continue to cause havoc,” said Abraham.

Discovery Insure working through the numbers

Darryl Grater, the executive head of distribution at Discovery Insure, said the insurer has received numerous claims from KwaZulu-Natal but was still working through the numbers and will only be able to confirm these in the coming weeks.

He said most of the claims were building claims, although Discovery Insure has also received motor and household contents claims.

Although fewer in number and value than personal lines-clients, Discovery Insure has received some commercial claims.

Discovery Insure’s Classic and Purple Plan clients have never had an excess applied to flood- and storm-related claims, as a standard benefit of their policy, he said.

Grater said Discovery was currently focused on the expeditious assessment and settlement of claims, particularly those from clients who were most in need.

Discovery Insure has moved additional staff and assessing capacity to KwaZulu-Natal.

Grater said some clients have already received emergency temporary accommodation as part of their policy benefits, and most clients automatically qualify for car hire and have already been provided with a rental car.

The Discovery Group was providing assistance through donations to, among other organisations, Gift of the Givers and its MovetoGive campaign across Vitality members.

Absa waives flood-related excesses

It was reported this week that Absa is waiving excesses for flood-related claims to provide relief for its customers affected by the disaster.

“Given that we have a crisis, it will be not prudent as people deal with [losses suffered owing to flooding] and then also worry about excesses,” Faisal Mkhize, managing executive for relationship banking at Absa Retail and Business Bank, told Fin24.

In recent days, Absa has received 2 000 claims nationally, of which 1 634 were from KwaZulu-Natal.

“My reading of this is that we are going to still see an uptick in terms of claims because some people are in hospital or are figuring out how to just find shelter,” Mkhize said was quoted as saying.

Absa has sent a dedicated team to KwaZulu-Natal to respond to an influx of claims and ensure backlogs are avoided.

The bank has earmarked R8 million for community relief efforts and another R2m to provide relief for Absa employees impacted by the disaster.

Avbob providing free funerals

Avbob announced that it will provide free funerals to a maximum of R20 000 per deceased, to assist families to bury their loves ones lost because of the floods. For assistance with a free funeral, affected residents should contact their nearest Avbob funeral branch in the province.

It has also set aside R7 million for immediate assistance to communities that have been severely affected by the floods. The donation will be distributed in partnership with Gift of the Givers, Rise Against Hunger and the SPCA.

‘Floods will have a long-term impact’

Andrew Bahlmann, the chief executive of corporate advisory firm Deal Leaders International, said the floods will have long-term financial impact on businesses that were just recovering from the July unrest.

He said that in the short term, business performance was being impacted severely because of the geographic concentration risk.

“This is highlighted by KwaZulu-Natal’s pivotal role in South Africa’s supply chain and logistics, with the closure of container terminals at the Port of Durban illustrating just how unusually severe this crisis is, with the impact spreading far wider than KwaZulu-Natal,” he said.

Climate change was increasing the insurance and recovery costs following more frequent and severe floods, as well as other disasters, such as fires.