Climate Change Affecting Insurance

February 19 - Speaking at a forum this week, the Chief Executive of Santam, Ian Kirk, noted the effects of climate changes on the insurance industry.

Ian Kirk said that if climate changes intensify, we may one day reach a point where many parts of South Africa could become uninsurable.

"Huge tracts of this country, and of the world, could become uninsurable or become unaffordable to insure," said Kirk. "It depends if we're successful with reducing our carbon emissions."

Kirk said that if carbon emissions were not successfully reduced, risks will increase significantly, and a point may be reached where the risk becomes too high to cover.

"Our organization is paying claims now to farmers and property owners in the Southern Cape for fire damage," said Kirk.

"Two and a half years ago they were under water. It's affecting us and we have to rise up to this," he said.

Insurance groups in Europe and the United States have also started to re-examine their risks in many areas where climate changes have started to wreak the most havoc.

Santam is working in close collaboration with the University of Cape Town to examine climate changes in South Africa.

"We're looking at the coastline, at areas around the Vaal Dam and there are parts of the West Coast which are a problem," said Kirk. "Langebaan is a problem and so are parts of the Southern Cape.

"We're approaching this in a responsible way," said Kirk. "It's not a case of turning around and saying 'we're not going to insure you', but the situation is going to get worse and we're going to have to re-rate those areas."

"You can't keep passing the risk to the insurance company," he added.