Several South African insurance companies are excluding damages related to the possible failure of Eskom’s national grid, which could result in a catastrophic event. “This decision has arisen as reinsurers have indicated they would not provide coverage in event of a total grid failure. This effectively leaves insurance companies with no option but to consider grid failure as an uninsurable risk,” says Guy Jameson, Sales Operation Consultant at GIB. Sasria has also stated that it would not be liable for any pay-outs in the event of a total grid failure, because loadshedding is not an insurable risk. Although the country has not suffered a total grid failure, insurers are seeing increasing claims following loadshedding to clients’ equipment. Loadshedding is different from a grid failure, so some insurers have not excluded claims following a power surge, even though loadshedding is not an insured peril. Companies need to start thinking about disaster management plans in the event of total grid collapse. There are warnings of possible looting and civil unrest, with the consequences of severe damage to infrastructure across the country and where Eskom would likely face difficulties in getting the grid operational due to its extensive national footprint. Although the likelihood of a total blackout is low, the consequences of such an incident could be devastating, making it worth preparing for. Although a total blackout presents several dangers, the primary threat is the time it takes to bring a system back up from that total collapse with estimates stretching into weeks rather than days. Major considerations for organisations developing blackout plans are the eventual failure of South Africa’s telecommunications networks and financial systems together with water and fuel shortages. “This scenario could see current logistics and supply chains becoming unstable, increasing the potential for fuel shortages. Generators requiring diesel could become less reliable than backup solutions such as solar-powered systems. From an IT perspective, regular data backups are always a must for any business but considering possible eventualities, they are now more important than ever,” adds Jameson. Experts are suggesting that business continuity planning for load-shedding and grid failure are very different. The first can usually be managed within the business premises, with on-site power, water and other backups which will allow the business to continue to operate efficiently for a few hours. However, in the case of a large-scale outage, the same is required but for a greatly extended period and in addition to backups for critical resources that cover tech, telecoms, water supply and logistics. GIB says initial commentary from insurers has been somewhat ambiguous in terms of what is covered and what is not. What seems to be clear is that there is a definite push to avoid any losses associated with grid failure. “This raises questions around consequential loss and whether it can be directly associated with a particular claim. If grid failure results in any other public supply being affected (for example, water), then any consequential loss might also not be covered,” he says. So, what exactly will be covered? “If a defined event takes place at your premises as a direct result of grid failure (fire, stock deterioration that has caused financial loss to the business), there will be no cover. Should this occur, you need to consider the consequences of this with your insurance advisor so that a well-considered and structured response is in place,” says Jameson. Glossary of terms: The different terminology relating to power failures can become quite confusing, so in short: Loadshedding is a controlled interruption of the electricity supply to the public, to prevent damage to the electricity grid. Grid failure occurs when there is more electricity demand on a network than available supply, which loadshedding has helped to avoid for years. When demand exceeds supply, it will cause an imbalance in the system, resulting in the grid operating at a lower frequency than what it is designed for, resulting in a total or partial interruption, interference, suspension, blackout, and/or failure of the electricity grid supply. A power surge is a sudden rapid variation of the voltage magnitude / electrical transient voltage or a power spike in any electrical system. Due to its sudden unforeseen nature, insurers invariably cover losses due to these occurrences if so, stated in their insurance schedule and mainly relating to mainly domestic, but have capped their exposures to certain limit. Source: FA News Written by: Guy Jameson, Sales Operation Consultant at GIB
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Santam has informed us of the latest changes in their policy endorsements regarding Power Surge & Electricity Grid Failure. The last couple of months has been a period of immense challenges for our country. We have seen high levels of load shedding, which impacts our daily lives. The country’s power utility has reassured all of us that it is working hard to protect our electricity grid by balancing supply and demand in a controlled, risk-managed manner. Within this environment, Santam wants to provide you with clarity on your cover, cover changes, and tips on how to reduce your risk. Power Surge cover Load shedding, the temporary switching off of power supply in a scheduled and controlled manner, in itself, is not explicitly covered by insurance policies. However, it does result in the frequent switching on of electricity supply to your premises and, depending on the quality of the network and the components thereof, it could cause power surge that damages your electronic items. Subject to the electricity grid failure or interruption exclusion noted below, Santam continues to provide cover for power surge damage, including after load shedding, if selected on your policy. During the last 12 months, our power surge claims have however increased by around 50%, and more than 200% over the last 3 years. To ensure the sustainability of this power surge cover, with effect from 1 June 2023, the following comes into effect: 1. You will have a compulsory excess amount of minimum 10% of claim , subject to a minimum of R5 000 when claiming for any pow surge damage. This minimum excess amount will also apply to any lightning strike damage under the business all risk, personal all rand electronic equipment sections of cover. 2. The following will be excluded from our power surge cover: - Power surge damage that occurs as a result of switching on electricity, following load shedding in excess of 12 consecutive hours. - Power surge damage that occurs as a result of switching on electricity, following electricity grid failure or interruption. 3. The Accidental Damage section of cover no longer provides cover for damage caused by power surge, as this can be specifically insured under its own specific section of cover. SOME TIPS TO HELP YOU REDUCE OR EVEN ELIMINATE YOUR RISK OF LOSS DUE TO POWER SURGE: It is best to unplug your devices when the power has been switched off. After power has been restored to your premises, it should be safe to plug them back in again. In an electricity grid failure or interruption scenario, this is especially important. Surge arrestors or surge protection devices may provide protection, depending on the type of surge experienced. The following should be considered: - Any device should come with a warranty of at least 5 years, for which you should receive an installation certificate. - Any device should protect against over voltage, under voltage, multiple strikes and lightning surge. Remember to check your policy to confirm your power supply covers, including their insured amounts. You can select, reduce or increase your power surge cover options at any time, with the resultant impact on your premium. Electricity grid failure or interruption Electricity grid failure or interruption means a total or partial interruption; interference; suspension; blackout; failure; of electricity supply in connection with any national; regional; municipal; local; private; grid, in connection with any premises or business of the Insured. With effect from 1 June 2023, Santam’s electricity grid failure or interruption exclusion applies and where already enforced, is extended to incorporate the following: 1. Any damage caused directly or indirectly by electricity grid failure or interruption, except as specifically provided for under the Business Interruption section in respect of elective extensions to other premises, namely: – Public telecommunications – insured perils – Public utilities – insured perils and then further subject to the Electricity grid failure or interruption being to an area not greater than any one single municipal area. Power surge damage as noted by point 2 under Power Surge cover above2. Click here for link on FAQ on these changes Should you have any questions regarding your policy please contact Koketso email:service@daberistic.com tel:(011)658-1333 Imagine submitting a claim to your insurance company, only to have it rejected based on information you don’t understand. What should you do, when the insurer just does not understand your view? Well, meet the insurance ombudsman – it is his job to care about your dispute! An ombudsman is an official whose duty it is to represent the interests of the public, by investigating and addressing complaints of maladministration or a violation of rights; are usually appointed by the government or parliament; and is not supposed to be influenced by political parties or affiliations, but should be able to conduct an independent investigation into the complaint that was laid. In short, the ombudsman serves as a mediator. South Africa has the various ombudsman available to its citizens, but today we will focus on the short term and long term insurance ombudsman and its roles and responsibilities; both of which are recognised in terms of the provisons of the Financial Services Ombud Schemes Act. Every short-term insurer has agreed to abide by the decision of the Ombudsman and this can relate to any of the following personal lines of short-term insurance: motor; house owners (building insurance); householders (content insurance); cell phone; travel; disability; credit protection insurance; commercial insurance; claims disputes; etc. The Ombudsman for Long-Term Insurance has the main duty of resolving complaints through mediation, recommendation and then, as a last resort, determination (or rulings). These determinations or rulings are legally binding on the contributing insurer, but not on the complainant, who has the option to go to court if unsatisfied with the ruling. The essential characteristics of an ombudsman are important, as it determines its impartiality. The insurance ombudsman should be free from interference in the performance of its duties and it should be independent from influence. They must also produce decisions that are seen to be fair, by making decisions based on the information available and having pre-set criteria for reaching a decision. Accountability to the public is ensured by having its decisions published and made available to the public. Lastly, the ombudsman should work effectively by following informal and cost-effective procedures, supported by sufficient human, financial and operational resources. So, what procedure should be followed once you realise you’ll need the ombudsman? Well, firstly, you should have tried to resolve the matter with the company concerned, by following their internal grievance procedure. If this did not solve your problem, you should contact the Ombudsman; who will require that you submit a complaint (preferably in writing) and provide them with the necessary information such as the insurance company’s name, policy number, contact details and a factual summary of your complaint. You should submit all relevant supporting documents available, including proof of your attempted resolution with the company. The ombudsman will then start its investigation and guide you through the rest of the process. Isn’t it great to know that there is someone out there who can assist you when it seems you’ve run out of options?! Make sure you have the relevant contact details of the ombudsman you need to help you solve your problem as soon as possible! By clicking on the below you will be able to get the various Ombudsman contact details: Long Term Insurance Ombudsman Short Term Insurance Ombudsman Health Ombudsman Pension Fund Adjudicator (PFA) FAIS Ombudsman ( For Investments) If you have any queries for Short-term insurance please email service@daberistic.com Source: Hollard In an ever-evolving market that’s recently been facing tremendous challenges, Discovery Insure believe that there is an opportunity to be innovative and agile in making sure your clients’ cover remains relevant. Of course, while enabling them to enjoy even more rewards. We share with you a host of new and unique features, benefits, and product enhancements across personal and commercial lines. Here is a summary of what you can expect from Discovery Insure in the next year. Personal lines Below are some of the innovation’s you can look forward to:
Business insurance Below are some of the innovation’s you can look forward to:
If you would like us to review your Personal or Business Insurance contact William or Edmond in our Short-Term department email: service@daberistic.com Source: Discovery Insure It’s been a challenging time for South Africans: recovering from the effects of the COVID-19 pandemic, unprecedented vehicle inflation, rising fuel prices, devastating floods and over 50 days of continual loadshedding. All citizens and businesses have been impacted by these events and this is also true for the insurance industry. During lockdown, most insurers experienced saw a decline in the frequency of claims as a direct result of the restrictions imposed on the movement of our clients. Motor was impacted positively, and insurers saw a significant decline in accident, glass, and theft claims. Similar trends were experienced with regard to home contents, with a decline in burglary and theft claims. During this period, some insurers provided premium relief, reduced renewal increases, and refunded a portion of premiums. As restrictions have eased, there has been a return to a more normalised claims frequency trend, with adverse weather conditions in many parts of the country adding incremental pressure to claims volumes. Vehicle repair costs have increased well above inflation and the nature of vehicle thefts has changed, with newer and more expensive vehicles now being stolen. Similarly, the average cost of contents and building claims has increased to new levels, with a particular increase experienced in the number of power-surge claims. While you will be aware that rate and sum insured adjustments are routinely performed in our business, the significance of the above claims experience will unfortunately result in incremental increase adjustments over the coming months. As always, increases will remain highly segmented by policyholder and every effort has been made to limit the extent of increases as far as possible. The following excess adjustments have been implemented for Santam & Discovery Insure. Santam Vehicles: Compulsory (basic) vehicle excesses will be increased by R1 000 for all our products. The R0 excess for policyholders over 55 years will remain unaltered. Vehicle glass excesses will remain unaltered. Contents: Excesses for lightning/thunderbolt, power surge, accidental damage, mechanical/electrical/electronic damage will increase by R500 for all our products. Discovery Insure
If you would like us to review your policy please contact William in our Short-term department email: service@daberistic.com Source: Discovery & Santam Record-high fuel prices in South Africa Orlik (2022) states that South Africa has faced one of its toughest economic slumps, due to the COVID-19 pandemic. Lockdown restrictions had a massive impact on the economy of the country. Many consumers are still facing the financial impact and struggling to keep head above water. South Africa has also seen fuel prices hit a record-high in the first six months of 2022. Fuel prices are mainly affected by two components (BusinessTech, 2022): 1. The rand/dollar exchange rate 2. Changes to the costs of international petroleum products, primarily driven by oil prices Russia’s invasion of Ukraine has a massive impact on the fuel price increase as well. According to André Thomashausen, an emeritus professor of international law at Unisa, fuel prices could continue to rise to over R40 per litre, in the worst-case scenario (Prior, 2022). On top of this, consumers also must pay more for public transport, food and other services, all affected by the increase in fuel price. Consumer are facing even more pressure to survive in trying times. 10 tips to help your tank last longer There must surely be ways to save fuel during these tough economic times with fuel prices continuing to rise. Saving fuel is something we can all benefit from. After all, who would not want their tank of fuel to last longer? Vitality Drive helps clients save on fuel Click here to read more
If you would like to Apply for Vitality Drive or Do a comparative quote contact Ed in our Short-term department email: service@daberistic.com tel (011)658-1333 Source: Discovery Insure People sometimes have the perception that insurance claims are declined for ‘no reason’. However, an insurance policy is a contract. The insurer agrees to cover you according to how much risk they think they take on in doing so and set your premium accordingly. When the provisions aren’t met, the contract has effectively been broken and the insurer is exposed to more risk than ‘what your premium covers’ and ‘what was agreed to’. Beware: In the fine print there might be conditions that could disqualify your claim if not met. The insurance companies are completely within their rights not to cover you – because the contract is not valid anymore. The best course of action is to take care to understand the wording of your policy and to take the stipulations seriously. Story based on actual events, names have been changed to protect identity Rob had his car stolen at a shopping centre. He then contacted us and we registered the claim. The Insurance provider came back and requested the Car tracker logbook. Rob then informed us that his car tracker was cancelled as his policy lapsed due to non-payment. The insurance Company then requested details regarding the cancellation dates, proof of cancellation from tracking company, statements showing non-payment. Ultimately Rob could not provide any of these and later it was found that the tracker policy was under his brother’s name, this then caused the assessor to question “insurable interest” regarding the car. Upon further investigation there were other discrepancies found in the statement and the CCTV footage of the centre where the car was parked was requested for viewing. Ultimately the claim was rejected due to Condition of the policy not being met which is “Tracker is required to be active and working in order to have cover.” There are common pitfalls we see time and time again that result in insurance claims being repudiated, or only partially paid out because the ‘contract’ has been broken. Below are five key examples to look out for: 1.The regular driver and owner of a vehicle differ on a policy An example of where this happens, is if a parent is the policyholder of a vehicle that was purchased for their student child who is the regular driver. The parents have an insurable interest in the vehicle as there is a potential for financial loss if anything happens to it. In addition, if the child is not listed as the regular driver, the claim will likely be rejected and it may have an impact on the parents’ insurance risk profile. What can clients do to avoid this? Update your adviser on the full details of any new vehicle added to a policy, so that appropriate cover can be put in place. Do not assume that simply adding a vehicle to a policy will mean that it is covered. 2. Vehicle extras weren’t specified A case in point was when a client put in a claim for a bulbar that was stolen from his bakkie. No extras were noted in his policy and the sum insured was only sufficient to cover the bakkie itself. The claim was therefore rejected. What can clients do to avoid this? Ensure that all non-factory fitted accessories such as bull bars, sound systems and canopies are specified as additional extras, in addition to the sum insured value of your vehicle. Also keep in mind that you might need cover for mag rims on your tyres, so keep their replacement value in mind – anything you have changed or upgraded compared to the standard vehicle must be noted. 3. Security specifications weren’t adhered to All too common, this is an issue when claiming for a burglary/ theft. If your security features weren’t enabled at the time of the burglary, the claim will likely get rejected. If you tell your insurance company / broker that you have a tracker at the time of taking out the insurance policy it is your responsibility as the client to ensure that this tracking devise must have a valid contract and always be in a working order to prevent problems at claims stage, the client is responsible to ensure that the devise is active and working. If the tracker is no longer active the insurance company needs to be notified ASAP. On high value vehicle this may be a requirement in order to retain insurance cover. What can clients do to avoid this? Make sure you ask about any elements of your cover that are your responsibility. If you are covered for having a locked security gate, vehicle tracking devise, an active electric fence or burglar bars on your windows, these features need to be in place and in good working order at all times. This will keep both your property and you safe. 4. You moved but didn’t say anything to your insurer If you move and don’t notify your insurer of your new address, any claims at the new premises will be rejected. This might seem like an obvious change to make to your policy, but we do experience clients forgetting. What can clients do to avoid this? Insurers usually require that you give written notice of your new permanent, physical address before you move. This is because your new address means your risk has changed and your premium may also change. If you would like us to review your current policy contact Edmond in our Short-term department email; service@daberistic.com tel(011)658-1333 ext 105. Source: Apollotechnical.com, Business Report |
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January 2025
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