RIDING OUT THE STORM
Insurance risks have become a whole lot bigger
Proper risk management is essential for insurance companies and helps keep premiums down for their clients
The combined effects of climate change and poor maintenance of infrastructure mean that the risks insurance companies are expected to cover have become a whole lot bigger. The recent storm in Cape Town is an indication of the possible size and scale of severe weather events that might become the new normal in the future, says Christo Rautenbach, a coastal modeller at the University of the Western Cape and honorary research associate at the University of Cape Town. Models indicate that the frequency of one storm event every 30 years is likely to change to one storm event every three years, he says. As early estimates suggest the Cape fires and storms could cost the industry as much as R4bn, considerably more than previous disasters, insurance companies are likely to post a strained set of underwriting results this year. Unsurprisingly, the share prices of Santam and Rand Merchant Investment Holdings, which owns Outsurance, have still not recovered to the levels they were at before ne...
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