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#KnysnaFires, #CapeStorm will leave you budgeting more for insurance

The devastating disasters that took place in Knysna, Plettenberg Bay and Cape Town will not push up the premiums of clients living in high risk areas, at least not for the next 12 months, this according to Standard Insurance Limited.

Standard Insurance Limited says natural disasters have only accounted for 4.6% of total claims over the past two years – a period known for flooding and hail damage in many areas. That’s a total of 11,000 catastrophe claims since 2015 out of approximately 240,000 total claims for the same period.

While the recent disasters have resulted in an initial estimate of approximately R100m in claims for the company, compared with recent reports of estimated total industry claims of between R3bn and R4bn this is not far off the percentage of catastrophe claims seen in any particular year by Standard Insurance Limited.

Louis Hay, head of short term insurance propositions for Standard Insurance Limited, says premiums are always going to be higher for individuals in high risk areas, much the same as insurance premiums are higher for businesses in high risk industries.

Dawie Loots, chief executive officer of MUA Insurance Acceptances, agrees, saying that the recent events will not necessarily directly impact on premiums for homeowners living in high risk areas. “We’ve always considered each risk on its own merits. Fire is a peril that can occur at any time at any place, and is one of the major perils that insurers cover and will continue to provide cover for.”

Why you need to insure your home at replacement cost and not market value

While it may be true that events will not directly impact on the premiums paid by those living in high risk areas, at least not in the immediate future, Loots warns that clients should review their policies to ensure that their insurance cover is still sufficient.

“It is expected that building costs will increase following the disaster in Knysna, so it is advisable to review the replacement cost of the building at this point,” advises Loots.

The fact is, even if premiums are unlikely to suddenly increase in the immediate aftermath since the fires, your insurer will typically only effect changes to your policy once a year on policy renewal, and even then only with advance notice. You might find yourself having to fork out more for insurance anyway, or risk being under-insured.


Mariette Steynberg is a qualified economist with a post-graduate diploma in financial planning. She has enjoyed working on holistic financial plans for clients in various stages of life, as well as a development economist assessing the socioeconomic impacts of new developments. When she is not working, Mariette enjoys parenting her quirky, delightful toddler girl. Cloth diapering, Eskimo kisses and the importance of reading to your child are all causes close to her heart. Mariette is passionate about financial education and hopes to use the experience she has gained to share knowledge with HomeTimes’ readership. Her goal is to provide information that is implementable by everyone.

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