[11 Nov 2016]:  The East Rand has been declared a NatCat zone by insurers after heavy rainfalls and flash floods caused extensive damage to vehicles and property in the vicinity of Linksfield and the Gilloolys interchange on 9 November.

“As at lunchtime on 10 Nov over 150 claims had already been lodged in Aon’s call centre alone, and continue to pour in. Some insurers has set up facilities at salvage yards for vehicles that were submerged to be immediately assessed. Huge property losses have also been incurred, especially in the vicinity of the Jukskei River which burst its banks. While it’s still too early to quantify the extent of the damage today, expectations are that these will be significant and that claims handling will be kicked into high gear to deal with the influx,” says Mandy Barrett, Manager of Personal Lines Marketing & Sales at Aon South Africa.

According to Aon South Africa, risk advisors and insurance brokerage, in the last four years, weather-related damage has cost the insurance industry a staggering R2.5billion in losses. 

While severe weather is not an uncommon occurrence in South Africa, what makes the events in Gauteng particularly noteworthy is the net retained exposure that the province represents.  Gauteng’s built-up area constitutes only 0.5% of SA’s land surface area, but due to the fact that the area is so densely populated, Gauteng constitutes 35% of the exposure to catastrophic events such as hail storms and flash floods. 

Not All Insurance is Created Equal – Get Professional Advice

Many consumers still believe that we are more insulated from extreme weather conditions such as hail storms, floods and strong winds, so they tend to cut their cover on the flawed premise that extreme weather events are too unlikely to happen. You certainly don’t have to live in the vicinity of a dam, lake or river to experience floods as yesterday’s events prove.

“If we look at the five years especially, climate change looks set to continue to play havoc. One of the most important learnings that consumers can take out of the recent weather catastrophes is to assess whether they are properly covered for worst case scenarios before it is too late. In this regard, a professional broker plays an invaluable role in guiding you through a proper needs analysis, interpreting the policy terms and conditions, helping you mitigate your risk, and in turn managing your premium costs. 

“Insuring your most important assets – likely to be your vehicles, home and everything in it - and your ability to recover from a major catastrophe, should be approached in the same way as investing in the stock market – you’re unlikely to do it without professional advice,” says Mandy.

Many people don’t have a clue what their policy terms and provisions actually mean. If going the D-I-Y approach without professional advice, it’s unlikely that they will be able to differentiate what is being sacrificed if premium price is their only means of comparing insurance covers.  Cheap insurance premiums are cheap for a reason – they usually cover only the absolute basics and any additional cover such as hail, flood damage and so on need to be purchased at an additional premium.  If you don’t know this, you could assume that you’re covered for a peril when in fact you are not.  You’re likely to find this out the hard way – at claims time - when it is too late.

Mandy points to the importance of advice with an example of a client who lost everything in her home when it was flooded on Wednesday.

“She was only left with the clothes on her back.  Even her car was not spared as this was parked in the garage at the time. Fortunately our client is comprehensively covered on our Santam By Preferenceproduct.  This means that not only is she covered for the repairs or replacement of her vehicle, home and possessions, but we will also provide for alternative accommodation – this covers her for the cost of staying somewhere else, like a hotel or rented house, while her house is being repaired.  Even the accommodation for her pets will be taken care of. No-one really considers the aftermath of a disaster and what that means for you financially. However this is exactly what a broker or risk advisor is trained to do.  This type of support and advice in structuring your insurance cover proves lifesaving in what could otherwise be a lose-all situation,” explains Mandy.

Filing your claim for a NatCat

Aon offers the following advice for policyholders filing claims after yesterday’s flash floods: 

• Notify your broker or insurer of the claim as soon as possible. Assess the damage and make a comprehensive list of all items and damage. With the building industry heading for its annual shutdown in December, the race is on to get damages sorted.
• With high claims volumes, there’s likely to be a shortage of hire cars so don’t delay.
• If you house was flooded, try and clear out as much water as possible to prevent further or permanent damage. Take photos – this will be very helpful to the insurance assessor for repair purposes.
• Insurers work with pre-approved repair companies – check with your broker before you embark on any emergency repairs with non-approved contractors or you may pay a higher excess.
• Based on previous scenarios with high claims volumes, you could experience delays in repair due to the strain on available capacity of service providers.  Some insurers might not extend cover such as car hire where the repair is authorised but the repairer is unable to complete motor vehicle repairs within the required period. If the car is still in a driveable state, wait until the new year to take your vehicle for repairs if the repairer cannot confirm that this will be completed before the year end close.
  • Talk to your broker to make sure you are properly insured for all eventualities going forward. Under insurance is possibly the biggest reason for partial pay out of claims, if not outright rejection.

According to Aon, severe weather conditions, from golf ball-sized hail to heavy rainfalls and flooding are a far more regular occurrence and will continue to increase in frequency and voracity. Consumers need to make sure that their insurance policies cover them comprehensively, not only for the damage, but for any alternative arrangements that need to be made while the damage is being repaired.