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Business loss from storms could top R500m - expert

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Floods - [https://timesofindia.indiatimes.com/photo/msid-58768076/58768076.jpg?1502589] Floods - [https://timesofindia.indiatimes.com/photo/msid-58768076/58768076.jpg?1502589]

Losses to businesses due to infrastructure damage from this week's devastating storm in KwaZulu-Natal could amount to between R400m and R500m, according to Gary Ferguson of insurance brokerage and risk advisers Aon South Africa.

This estimate includes uninsured losses.

"Being only a day after the heavy storm, businesses are still taking stock of damage. From an insurance claims perspective, it could take another week or so for businesses to feel the financial impact of losses," Ferguson told Fin24.

He said contacts in Durban have indicated that the authorities acted very quickly to clear Durban harbour of obstructions.

From a claims perspective, he does not foresee a large number of insurance claims that, at least initially, relate to the port. This is mainly because checking containers for damage due to the storm, for instance, will take time.

"Infrastructure has taken quite a battering in KZN and from the trade sector I also expect it to take a week or so to be able to take proper stock of losses," said Ferguson.

Business interruptions

In terms of business interruption losses, he said that many insurance policies come with high policy excesses or deductibles. Businesses may therefore have to carry losses due to damage to infrastructure themselves, although it will take a couple of days to get information on the extent of claims.

While Ferguson estimated that losses to businesses in KZN could amount to between R400m and R500m, he said that , conservatively speaking, in Gauteng they could around R140m for insured businesses, and likely more than R350m for uninsured losses.

Ebrahim Asmal, Santam’s executive head of claims and group sourcing, said the short-term insurer was currently processing a significant number of claims following damaging storms in Mpumalanga, KZN and Gauteng.

He said that Santam recognised that "extreme weather events" like hail storms were increasing in intensity and occurrence as predicted by climate change and the increasing urbanisation patterns.

"We acknowledge that this poses serious risks to the stability and quality of human society and the global economy. We are, therefore, a strong advocate of the need to build local level resilience and risk protection," he said.

Standard Insurance, meanwhile, indicated on Wednesday that it had received 1 718 claims since the beginning of the week, following storms in Gauteng and KZN.

“The storm conditions and hail caused quite severe damage in Gauteng, from roofs caving in and walls collapsing to accidents on the roads," it said in a statement.

"While similar claims are likely in Durban it is still too early to predict how severe the damage may be, but claims are expected to rise as the storm subsides and people assess the full extent of the damage”.


 

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Fin24

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