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Impact of East Rand declared catastrophe zone by insurers

Nov 11 2016 18:03

Johannesburg - The East Rand has been declared a natural catastrophe (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 Wednesday.

While it’s still too early to quantify the extent of the damage, expectations are that it will be significant and that claims handling will be kicked into high gear to deal with the influx, Mandy Barrett, manager of personal lines marketing and sales at insurance brokerage and risk adviser firm Aon South Africa said on Friday.

During the last four years, weather-related damage has cost the insurance industry a staggering R2.5bn in losses, according to Aon South Africa.

Insurance claims are pouring in and some insurers have 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 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," said Barrett.

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, therefore, 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.

Barrett provides some tips regarding insurance and claims:
 
Not all insurance is created equal

Many consumers still believe SA is 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 don’t have to live in the vicinity of a dam, lake or river to experience floods - this week's events in Gauteng prove.

“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,” says Barrett.

Filing your claim for a NatCat

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 rental cars so don’t delay;
 
- If your 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.

Warnings

Denise Shaw, chief operating officer of Standard Insurance said many insurance companies issue SMS or electronic warnings to clients about potential storms and hail.

“These notifications should be taken seriously and steps should be taken to secure homes and park cars under cover,” she said.

She said customers with claims arising from this week’s storms should submit their claims as soon as they can.

"We are working to ensure that all claims are processed as quickly as possible; where required assessors will be sent out to inspect damage and assist with facilitating repairs,” said Shaw.

She provides some cautionary tips for motorists who are caught unawares while driving:

- Try to avoid being on the road, but if you are, drive slowly and carefully;

- Reduce speed to match the road conditions and increase the following distance to at least a three-car distance;

- Turn headlights on so that you can be seen by other vehicles;
 
- If you can, pull off the road safely and activate your car’s hazard lights as a warning to other motorists;

- Do not park under trees as there is a risk of falling branches and debris;

- Be proactive and ensure that windscreen wipers are always in good condition so that they can cope with sudden downpours;

- Never get out of your vehicle, because of possible injury from hailstones;

- Do not attempt to drive through water washing across the road, or across low water bridges. Your car could stall in the water. It requires only about 15cm of rapidly moving water to wash a car away;

Additional steps to avoid damage to homes and property when storms strike:

- If possible, make sure computers, TVs, decoders and other equipment is disconnected from wall sockets to avoid damage caused by electricity surges caused by lightning strikes;

- Check that roofs do not have broken or loose tiles that allow the entry of water during heavy downpours;

- Ensure that roof gutters are clean and unclogged, so that water does not accumulate and seep through roof tiles onto ceilings;

- Keep the windows of the house shut to reduce the chance of them being hit by hail or shattered by high winds.

Read Fin24's top stories trending on Twitter:

disaster management  |  money  |  insurance
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