A recent voice message on WhatsApp evoked memories of calls in 1994 to stock up on candles and baked beans for the forthcoming civil war. I recall thinking that burning candles and the after-effects of baked beans could be an explosive, if not a deadly, combination in the underground bunker where one would be hiding from the marauding masses.
The essence of the message was that Old Mutual was preparing for the catastrophe following the collapse of the electricity grid of South Africa in early December. In typical fake news style, it even mentioned Trevor Manuel as being involved in these arrangements. Apparently, the banks had teams on standby to empty ATMs to prevent a re-occurrence of events during the riots of last year.
It was therefore with some trepidation that I read an article on Netwerk24 about Santam informing clients that they would have no cover in the event of damage resulting from the grid packing up. Unfortunately, the reality is far more boring than the bush-telegraph message.
Santam published the following information in a media release to intermediaries, outlining exclusions in case of the failure of the national electricity grid.
The year 2022 has seen unprecedented levels of load shedding due to unexpected breakdowns and planned maintenance to prevent the failure of the larger electricity grid. This has led to pressure from the reinsurance market to limit our exposure to business interruption claims arising from the failure of public utilities and public telecommunications resulting from any cause.
In the light of this, we are clarifying our cover regarding the explicit exclusion of a general electricity grid failure on all our policies and introducing new commercial cover limits for business interruption: public telecommunications and public utilities.
We acknowledge that the process of recent excess changes, renewal increases, and wording limitations has been extensive. These changes reflect the unprecedented nature of the shifts in our risk environment. While we wish the extent of our actions wasn’t necessary, the complexity of risk increasingly showcases the value of the intermediary and the benefit that can be gained from helping clients to structure the most effective risk management solutions.
Personal lines
General exclusions
We will not cover any loss, damage, legal liability, cost or expense of whatsoever nature directly or indirectly caused by, contributed to by, resulting from, arising out of, in connection with a national (including regional, municipal, local and/or private) interruption, failure or suspension of the electricity grid of South Africa for whatsoever reason, whether due to damage, an inability and/or failure, whether partial or total, of the utility supplier to generate, transmit or distribute electricity, or otherwise.
Property: contents
Amendment of contents of refrigerators and freezers coverage
Contents of refrigerators and freezers
We cover accidental spoiling of the contents of your refrigerators or freezers inside your private residence and outbuildings caused by a change in temperature.
Our compensation is limited to the amount shown in your policy summary. However, we do not cover the following:
(a) spoiling caused by someone adjusting the temperature control;
(b) damage to the refrigerators or freezers;
(c) spoiling due to load-shedding, or electrical grid failure, of a power-supply authority on a national, regional, municipal, local and/or private level;
(d) spoiling as a result of non–payment or non–purchase of power or any type of fuel.
A claim under this cover will not affect your no-claim bonus.
Commercial lines
Electricity grid failure or interruption
Notwithstanding any provision to the contrary in this policy or any endorsement thereto, the insurance provided by this policy excludes any loss, damage, liability, cost or expense of whatsoever nature, including any consequential losses in terms of any section of this policy, directly or indirectly caused by, contributed to by, resulting from, arising out of or in connection with any electricity grid interruption.
Electricity grid interruption means a total or partial interruption, interference, suspension, blackout, and/or failure of the electricity supply from the national, regional, or private, grid to the electricity grid of South Africa or Namibia to any business of the insured by any cause whatsoever.
Grid failure exclusion
The grid failure exclusion will be implemented for all personal lines and commercial lines policies in South Africa and Namibia as follows:
- New business: All new business quotations requested on or after 1 January 2023.
- Renewals: All policies renewing on or after 1 April 2023
Alignment with implementation dates for business on external systems will be contracted individually.
New commercial cover limits
Cover limits for business interruption public telecommunications – insured perils and public utilities – insured perils will be limited to the lower of 50% of the business interruption cover limit and R25 million, VAT inclusive, with a three-month indemnity period limit.
These new limits will apply as follows:
- New business: All new business quotations requested on or after 1 March 2023.
- Renewals: All policies renewed on or after 1 June 2023. Premiums will be adjusted accordingly to reflect the lower limits.
