What to expect from short-term insurers after the KZN floods

What to expect from short-term insurers after the KZN floods is in the back of consumers’ minds, whether they have been personally affected or not.

Many middle-class consumers have been lucky enough to have short-term insurance on their homes, as well as their home contents and cars, which means they will be able to claim most of the damage they suffer from their insurers.

Absa Insurance announced Monday that it has decided to waive excess fees for flood-related complaints to provide relief to customers who have been affected by the floods.

“Since we have a crisis, it won’t be prudent as people face losses from floods and then worry about excesses as well,” says Faisal Mkhize, executive responsible for relationship banks at Absa Retail and Business Bank.

He said the waived taxes are likely to amount to millions of rand.

READ ALSO: KZN flood damage could cost billions

Other short-term insurers

Vivienne Pearson, CEO of the South African Insurance Association (SAIA), says SAIA is not aware of any other insurance companies following the same approach as Absa and the bank’s initiative can be seen as a way to assist its policyholders.

“From the SAIA’s point of view, it is important to note that many of our members have indicated that they are ready to assist their policyholders and that individual insurers will do it their own way.”

READ ALSO: In numbers: how the government intends to respond to the KZN floods

Premium increases?

Increases in short-term insurance premiums usually follow after a major disaster like KZN floods and consumers are wondering if these increases will only be for customers on the coast or in hazardous areas.

Pearson says that while there has been talk of premium increases, consumers should remember that all insurers review policyholders’ premiums from time to time, typically annually as per policy agreement.

“However, this depends on how individual insurers assess the risk of insuring properties in the affected areas. It’s too early in the process and it’s extremely unlikely that an SAIA insurer has started considering premium increases.

“The approach right now is to collect complaints, help customers formulate specifications, get damage assessed and pay complaints as soon as possible. Any consideration on premiums would be made on the basis of an overall assessment of flood-related losses and the extent to which reinsurance has covered insurance companies, “he says.

READ ALSO: Sassa increases the relief allowance for the flood victims of the KZN

Will short-term insurers still insure buildings on the coast?

Will insurers continue to provide building coverage for homes built near the coast? Pearson says no insurer has indicated to SAIA that such a step is under consideration. “It is exceptionally rare for insurers to consider a general decision not to offer a certain type of coverage based solely on geographic location.”

Explain that coverage and rewards are based on a number of factors and ratings accumulated over many years and not on a single event.

“SAIA and its members will continue to work with all stakeholders, including the government, to find ways to reduce risks, including climate-related risks, so that insurance can remain affordable and therefore sustainable.”

Pearson says no claims data is available for the industry, as flood victims will take at least more days to formulate their claims and submit them to their insurer. Each insurer will have their own running total and the final figures can be shared with SAIA.

READ ALSO: LIVE: KZN floods – Government declares a state of national disaster, R1 billion immediately available

Short-term insurers did well after the Knysna fires

“The Knysna fires a few years ago were a comparable disaster. Eventually, the claims reached several billion rand. Insurers performed exceptionally in collecting claims, assisting with losses and making timely payments. Even the insurers have been adequately reinsured “.

Therefore, says Pearson, SAIA is confident that its members have the skills, experience and full capacity necessary to deal with flood damage claims.

“We believe the long-term experience of the non-life insurance industry in handling disaster-related claims can provide a level of comfort to those who have suffered losses that are in good hands.”

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