Insurers pull cover for grid failure, will other loadshedding exclusions follow?

Bruce Whitifield talks to Christelle Colman, co-founder and CEO of Ami Underwriting Managers.

– Insurance companies are having to address the impact of increased claims related to loadshedding.

– As we all face the impact of ongoing power cuts, the answer to solving the puzzle of insurance coverage will have to be a collaborative effort argues Ami Underwriting Managers’ Christelle Colman.

South Africa’s loadshedding crisis can’t but have an impact on every industry in the country.

The insurance sector faces particular challenges amid unrelenting power cuts and some big players have already announced exclusionary clauses for national grid failure.

According to data from BetterSure, claims related to power surges shot up by 250% in 2022 relative to the previous year, reports Moneyweb.

RELATED: ‘SA economy could have grown by 7% in 2022’ if not for curse of loadshedding

Businesses are also faced with the possibility of having to pay out for lost income when customers cannot access services during power cuts notes Christelle Colman, co-founder and CEO of Ami Underwriting Managers.

“The outages can also lead to a decrease in business activity due to the disruption caused, which may cause customers to look for other insurance companies for their coverage.”

RELATED: Loadshedding wreaking havoc on agriculture and meat producing sectors

The fact that loadshedding is here to stay, means that the insurance industry will need to adapt to this new reality says Colman.

One way insurers could do this is by re-evaluating their underwriting criteria, and potentially adjusting pricing based on the likelihood of loadshedding in different areas.

Insurance underwriters may also need to be more cautious when assessing risk and approving policies in areas where loadshedding is more likely to occur.

Christelle Colman, CEO – Ami Underwriting Managers

In conversation with Bruce Whitfield, Colman emphasizes the difference between a national grid failure exclusion and loadshedding itself, where insurance would cover things like freezer contents spoiling.

National grid failure is when the lights go off for weeks and nothing moves in this country.

Christelle Colman, CEO – Ami Underwriting Managers

What the international reinsurance market has said… is that they’re very nervous about this and they won’t cover it. So they expect the local insurers to bring in the exclusion and that is what we are starting to see filter through.

Christelle Colman, CEO – Ami Underwriting Managers

The rest of the conversation is around whether you are you covered for power surge claims as a result of loadshedding.

Christelle Colman, CEO – Ami Underwriting Managers

RELATED: ‘Owners of waterfront properties already having difficulty getting insurance’

The question, says Colman, is where the industry stands in terms loadshedding and how it is going to keep up with the various risks.

“More insurance companies could start pulling back and saying they can’t insure this anymore because it is becoming a risk that is too frequent and not unforeseen and sudden anymore.”

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Author: editor

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