According to the report S&P Global Ratings, Recent severe weather events have occurred since June 1 in the southern and eastern regions of South Africa They are testing insurers’ ability to adapt to climate change.
Heavy rains and floods in some areas of the Eastern Cape region, combined with storms in KwaZulu Natal, caused loss of life and damage to homes, vehicles and public infrastructure such as schools, roads and health facilities.
S&P points out that it is still too early to assess the financial impact of the event and any impact of the announcement on the South African insurance sector. Meanwhile, there is no low risk, especially for insurers with strong financial security. However, S&P notes, if extreme weather conditions continue, insurers’ profits may suffer and savings may decline over the long term, especially if they continue to -corresponds to strong economic conditions, high prices and unemployment.
S&P plans to closely monitor developments in the second half of the year, especially as the expected transition to La Niña could worsen the climate.
In recent years, South Africa has seen an increase in the number of weather-related disasters such as floods, fires and storms, leading to a significant increase in insurance premiums and deductible levels. .
In 2023, primary insurers reduced their reliance on compensation, falling to around 30% from 32% in 2022. According to the South African Reserve Bank, the average total cost for primary insurers increased to 100.6% by the end of 2023, compared to to 98.2. % of 2022.