People living on the edge of society are exposed to a far higher risk of loss from natural disasters such as fires and floods.
Just as was the case last year June on South Africa’s south coast, outside the town of Knysna where a runaway wildfire destroyed vast tracks of land and burned down nearly 1000 homes. It was stated that the June wildfires of The Great Knysna Fires, as the event has become known was the result of unusual weather patterns that kept seasonal rains away, turning vegetation tinder dry. Then, winds of up to 100kph struck, reported “The National”.
And this was not an isolated event. Due to climate change increasing, natural disasters are affecting lives across the globe. Insurers are feeling the strain as claims mount amid more natural disasters. As Cover is no longer a certainty as insurance companies battle to deal with rising catastrophe-related claims.
Insurers say the increase in such claims has outstripped premium growth, resulting in what the industry calls a “protection gap”. This gap is the difference between the potential costs of disaster related claims, and the industry’s reserves to pay out, hence causing the cost of insurance to continually rise.
Frequency of weather-related catastrophes such as windstorms and floods has increased six-fold since the 1950s, according to ClimateWise research. ClimateWise is a coalition of the world’s largest insurers who have come together and formed a focus group based at Cambridge University in the UK. Among ClimateWise members are industry big names such as Allianz, Aviva, Lloyd’s, Prudential, Swiss Re and Zurich.