Consumers urged to proactively mitigate risks associated with load shedding

The South African Insurance Association (Saia) is pleading with consumers and businesses to take every possible step to prevent or reduce business interruption and potential damage to property emanating from load shedding.

It also urges policyholders “not to make assumptions” about what sort of damage related to load shedding “is and is not covered” in the specific wording of a policy.

In a statement issued on Monday, it says members continue to submit a high number of claims related to load shedding – but points out that the volume and value of claims thus far this year has forced insurers to take a variety of underwriting measures to limit their exposure.

Read: Darkness increases insurance claims

It notes that measures taken by insurers include splitting future cover for claims relating to load shedding, with a separate risk adjustment premium, or increasing the first amount or excess payable.

“This allows consumers to make a specific choice about what they wish to have covered including an understanding of what they are covered for.

“Certainty of what the consumer is covered for is the number one priority that insurers have.”

Saia says adjusting premiums is one of the necessary steps to ensure the industry remains sustainable.

Read/listen: Load shedding and insurance: What you need to know

However, it says another critical concern is the potential impact on affordability among some consumer segments and small and medium-sized enterprises (SMEs).

Claims and fraudulent claims on the rise

Speaking to Moneyweb, Momentum Insure says it has seen a 100% increase in power surge claims due to power outages, excluding crimes that have taken place during a blackout.

The insurer says there has also been an increase in fraudulent claims being submitted by clients where the risk item has been defective for some time due to wear-and-tear and a claim is submitted for a power surge.

The insurer says it has increased its efforts to educate clients about power surge claims and preventative measures to mitigate losses.

“We urge our clients to be vigilant around ensuring that cellphones are charged, in case of an emergency, and to also invest in power surge protectors.”

The harsh reality

Santam’s head of personal lines underwriting, Attie Blaauw, says: “The reality is load shedding isn’t going away any time soon and that damages will occur.”

Recalling Santam’s 60% increase in claims for damage to sensitive electronic items due to power surges during the first half of the year, Blaauw says everyone has a responsibility to ensure they are prepared for power cuts and should take steps to minimise the chance of damage as far as possible.

Read: The comprehensive load shedding survival guide

OUTsurance says it has also seen a material increase in claims related to load shedding.

“We have implemented a higher excess for claims as a result of power surge and dips to keep premiums more affordable and have no current plans to implement any other changes,” it says.

Saia says the onus is on the consumer to ensure they understand what they are covered for and what limitations are included in their insurance policies.

“There is a great deal that consumers and business owners can do to prevent potential losses and manage their respective risks,” it adds.

“You still have considerable influence over how much you pay and the probability of having to claim. It requires some effort but will always be worth it.”

Listen to this interview with Discovery Insure’s Darryl Grater (or read the transcript here):

Nondumiso Lehutso is a Moneyweb intern.