BUSINESS NEWS - Load-shedding has led to a sharp increase in insurance claims for surge damage to electronic equipment and appliances, and it is wise to check if you are covered for it because it is not necessarily included in all short-term insurance policies.
According to Anna-Marie Nienaber, financial advisor and director at Securitas Financial Group, George, it depends on each client's policy schedule.
"Some insurers automatically include a limit for power surge cover and with other insurers the client chooses a limit, and pays a premium for the limit chosen.
"It all varies from the different product types available, as on offer from the spectrum of insurance companies in South Africa."
Grid failure losses not covered
In the case of a possible electricity grid failure, reinsurers have informed various insurance companies that they will not be supporting losses arising from electricity grid failure. "This means that your insurer will also exclude any losses or claims arising from electricity grid failure, including any consequential loss. Most insurance companies have already started implementing this exclusion," says Nienaber.
It is important to know the difference between load-shedding, electricity grid failure and power surges (an unexpected spike in the voltage supplied to an electrical circuit). This exclusion does not apply to damages caused by power surges during load-shedding, which remain covered, subject to the terms and conditions in the client's policy.
Nienaber is serious that the above changes and possible risks place a responsibility on clients to engage with their short-term insurance advisor, confirming that they are sufficiently covered.
'That could leave us exposed'
The senior assistant insurance ombudsman, Peter Nkuna, said in a recent interview with eNCA that insurance companies have been suffering greater losses as a result of damage caused by load-shedding. Some of this risk is also passed on to reinsurers, who are becoming concerned, and in some cases unwilling, to provide cover for insurers.
"Without the backup of the reinsurers, insurers are feeling a bit too exposed. Insurance is about the probability of things happening. With what we have been experiencing over time, one can certainly expect that at some point one is going to suffer losses as a result of power outages or load-shedding, and the magnitude of these losses is what has led to this."
Nkuna said where reinsurers find that something is an unworthy risk and that it is not going to be to the benefit of the majority of policy holders, they will not underwrite it and cannot be forced to do it. "It is challenging times for everyone."
The changes in weather patterns and an increase in political uprisings and other protest actions, and the resultant damage, have also been plaguing the industry and reinsurers have expressed concern over this.
"All these things have implications for the insurability of the risks that we face and the greater the risk, the more likely it is that insurers may not be willing to provide the cover that we need. That could leave us exposed."
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