Darkness increases insurance claims

Short-term insurers have seen a significant increase in claims as a result of the severe power cuts across SA.

Power surges cause damage to sensitive electronic equipment whenever electricity supply is restored, while car accidents increase when traffic lights and street lighting stop working. Burglaries also increase when the lights go out – and alarm systems shut down.

Crime risk

According to Anneli Retief, head of Dialdirect Insurance, the daily occurrence of load shedding in SA is much more than just a major inconvenience.

“Comparing the number of burglary incidents and the number of vehicle accidents when there is no load shedding to when there was load shedding, we found that burglaries increased some 3.2% and vehicle accidents by 5.2% when there is no electricity.

“Over weekends, these figures more than double. Break-ins increase by 8% and vehicle accidents rise by 13.5%,” she says, noting that Daildirect analysed claims data from July 2019 to May 2022.

“Power surges are also causing an increase in claims. A power surge takes place when the flow of electricity is interrupted and then starts up again, sending electricity back into the system. Power surges can cause instant damage to electrical appliances by melting plastic or metal parts and burning circuits,” says Retief.

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

Multiple risks

Philippa Wild, head of commercial underwriting at Santam, says Santam has also seen a significant increase in claims for damage to sensitive electronic items due to power surges, across its personal insurance and commercial insurance portfolios.

“The reality is that load shedding has an immense impact on consumers and businesses alike, who must cope with the damage to appliances brought on by power surges and dips, as well as an increase in crime-related risks as a result of faulty security systems,” she says.

Wild says Santam has seen a definite increase in theft claims due to electric gates being put on manual, alarms not working, and dark houses.

Unfortunately, businesses cannot claim for lost income as a result of load shedding.

“Business interruption cover, if purchased, provides cover for loss of income caused by a defined set of perils, which is provided in the insurance contract,” she says. “Damage caused by [a] power surge is covered, and the terms and conditions associated with this cover will be clearly defined in the insurance contract.”

Read: The comprehensive load shedding survival guide

Road accidents

Ricardo Coetzee, head of Auto & General Insurance, says it too has seen a big increase in road accidents. “The dangerous consequences of load shedding [are seen] when street lights and traffic lights are not working at night.

“Motorists are encouraged to drive cautiously at all times, but especially so in poorly-lit areas. Treat all inoperative traffic lights as a four-way stop, and when in doubt, yield to oncoming traffic.

“Do not assume that all other drivers will stop … exercise extreme vigilance and drive defensively.

“On the home front, when the lights go out, so do the alarm systems, gate motors and electric fencing. [This] makes it easier for criminals to gain access to your property – and spend longer in it,” says Coetzee.

He cautions that most insurance policies stipulate in their contracts that the house alarm must be activated at all times when the home is unoccupied.

“If your house is burgled during a power cut, then, theoretically, your theft-related cover would be moot,” says Coetzee, indicating that insurance companies might expect that systems that have standby batteries should be maintained properly.

“However, we believe that load shedding is beyond the control of our customers and they should not be penalised for it. As such, each case will be considered based on its own merits.”

Electrical transformers

Municipalities, and Eskom itself, also suffer damage due to load shedding. A few hours without electricity every day translates to lower electricity sales by municipalities, while municipal networks can be damaged by continuous power interruptions and power surges.

Eskom said in a statement last week that it experienced an increase in the failure of electrical equipment to such an extent that it has put a strain on its ability to restore failed equipment.

“Eskom is experiencing challenges with limited stock levels of mini-substations and transformers because of a recorded exponential number of failed electricity equipment due to network overloading,” says Mashangu Xivambu, Eskom’s senior manager for maintenance and operations in Gauteng.

“The network overloading is caused by illegal connections, bypassing meters, meter tampering, unauthorised operations on the network, vandalism of infrastructure and theft,” he adds.

In Gauteng alone, Eskom has had to replace and repair 116 (of 181) damaged mini-substations and 1 326 (of 2 314) damaged transformers during the last few months. It says that damages amounted to R152 million.

“Eskom is facing high demand of equipment that requires repair or replacement,” says Xivambu.

“Although we are faced with the challenge of equipment shortages, manufacturers have committed to continue to prioritise Eskom as they understand the impact this has on the economy, essential services and communities.”

Tips to prevent loss

Santam cautions consumers and provides guidance to mitigate the risks that may be caused by power interruptions:

• Make use of surge protection. Electric surges are one of the biggest causes of damage to equipment during a power outage. Installing a surge protection device can help minimise some damage in unforeseen situations. Have a surge protection device fitted to your electrical distribution board or alternatively at the power outlet to the electronic device.
• Ensure that your alarm system is in a working condition and the back-up battery is fully functional to provide power to the system in the event of load shedding.
• Keep a torch or headlamp handy in your home, or in your car if you arrive home at night during a power outage. Most smartphones have a built-in torch or torch apps which come in handy during unexpected power outages.
• Save emergency contact information on your phone but also keep a paper copy safe and accessible. This should include contacts for emergency services such as the fire department, police and medical services. Also include the contact information of friends or family along with insurance information.
• Ensure that your cellphone, laptop and tablet devices are fully charged ahead of scheduled blackouts. Be sure to charge them again as soon as possible once the power returns. It’s also a good idea to have an emergency phone charger (such as a power bank) close by.
• Get a small gas bottle and lamp, and even a small gas stove. Gas gives good quality lighting for a large area and can also be used for cooking and boiling water. It’s also a good idea to keep hot water in a thermal flask so that you can make hot drinks. Also consider preparing meals beforehand if you know when there’s going to be a scheduled blackout.
• Keeping emergency water stored is easy when frozen, while the frozen water will help to keep food cold during a power outage.

• Unplug your devices to prevent damage, but consider any electrical connection as live during a power outage as power can come back on at any time.

• Unplug any electronic devices or equipment or switch it off at the wall outlet, including telephone cables. This will prevent damage due to the power surges that may occur when electricity is restored.
• Back up your data: It is always important to back up data in case of a hard drive crash or unforeseen electrical fault. Online cloud-based backups are very convenient and are mostly automated, which means you have one less thing to worry about.

Listen: Discovery Insure’s Darryl Grater on power surge claims up 50% in six months and how insurers are reacting (or read the transcript here):