Lizelle Greeff | Increasing severe weather events and crime highlight importance of adequate insurance

Consumers are increasingly falling back on their short-term insurance as climate-related severe weather incidences increase and crime persists. This is according to the 2024/2025 Santam Insurance Barometer Report (the Report) which highlighted that 18% of consumers had claimed against a short-term insurance policy in the last 12 months, the highest percentage since 2019.

Across the globe the impacts of climate-related adverse weather events are being felt

United Nations Secretary General Antonio Guterres recently stated that soaring temperatures in Europe are no longer a rare event and “should be considered the new normal”[i].  Locally, while only 8% of survey respondents reported suffering a financial loss due to extreme weather events over the past two years, 48% of consumers said they were “very concerned” and a further 29% “somewhat concerned” about this risk.

Furthermore, according to the US’s Environmental Protection Agency (EPA), extreme weather events such as heat waves and large storms are becoming more intense with human-induced climate change[ii]. The Report echoes this, showing that a comparison of Q1 2024 versus Q1 2025 claims for flood and storm damage on our buildings policies reflects a drop in claim frequency alongside a rise in claims value, indicating an increase in claim severity.

Unfortunately, the damaging impact of severe weather is also exacerbated by consumer negligence. We have seen worrying signs of consumers neglecting important building maintenance due to financial pressures. For example, Santam has seen a rise in weather-related claims where the loss or damage is due to gutters not being cleaned and maintained or flat roofs being neglected. From 2023 to 2024, we experienced a year-on-year increase in claims volumes due to flood, storm, and wind damage and a decline in hail claims.

As the flood peril remains in the spotlight, we have deployed geocoding and geo-mapping technology to better understand our on-the-ground risk accumulation and to identify high flood zones. This helps us to ensure sustainability of cover for the bulk of consumers in the longer term.

Crime weighs on the mind of consumers

According to World Population Review, South Africa has the fifth highest crime rate in the world[iii].  South Africans are keenly aware of this, with a staggering 50% of Santam Insurance Barometer Report respondents citing societal issues such as crime as a top risk. Respondents were particularly concerned about burglary, mugging, and hijacking.

These societal stresses are evident in our MTN partnership, which covers a million policyholders for consumer tech products like laptops, smartphones, and tablets. We have seen a notable increase in claims volumes for muggings and petty theft, particularly in malls.

Encouragingly, while the previous Santam Insurance Barometer Report flagged an alarming trend of keyless vehicles and high-value SUVs being stolen, we have since seen a decrease in both hijacking and theft claims. This 2024 claims experience supports that underwriting interventions such as doubling up on tracking devices in the high-value vehicle are definitely effective. Applying these interventions does not mean that vehicles will not be hijacked or stolen, but they do increase the recovery rate. In some cases this intervention can also affect premiums, with 36% (29% in the 2023 survey) of Personal Lines insureds citing that they are trying to reduce their monthly insurance premiums by installing tracking or other monitoring devices.

The Santam Insurance Barometer Report also highlights digital criminal risks as top of mind for consumers. But, there is a growing disconnect between consumers’ perception of cyber risks and their purchase of insurance to cover against the threat. In the latest survey, 81% of consumer respondents were “concerned” or “very concerned” about future cyber threats, yet only 2% have purchased cyber insurance. A 2023 report by cyber security firm, Surfshark, ranked South Africa 5th on the global cybercrime density list, which is based on the proportion of internet users affected by cybercrime.

The growing complexity of cyber risk highlights a clear market need and while commercial cyber policies exist, there is a gap in the market for a Personal Lines product that protects individuals from the everyday digital risks they face. Social media hacking, loss of data from a malware attack, bank and credit card theft, and email hacking are among the top threats.

Santam continuously monitors the evolving risk landscape for emerging exposures

Santam is particularly focused on the interplay between financial pressures and consumer behaviour. These pressures are driving individuals to make strategic choices about their insurance coverage, balancing affordability with protection. This is evident in the growing trend of opting for higher excesses or self-insurance and installing monitoring devices to proactively mitigate risks.

Our emphasis remains on empowering consumers to maintain essential coverage while minimising the risks associated with underinsurance or neglecting necessary household maintenance, such as cleaning gutters or addressing structural weaknesses, which exacerbate weather-related claims. Through targeted interventions both in underwriting and customer education, we aim to foster resilience in the face of complex challenges and unpredictable perils.

*Lizelle Greeff, Underwriting Specialist at Santam Broker Solutions.