SA’s largest short-term insurer Santam said on Tuesday severe flooding in the Western Cape and further losses from property fire claims weighed on its underwriting performance in the nine months to end-September.
Torrential rains over the Heritage Day long weekend damaged physical infrastructure in parts of the province, resulting in the flurry of claims from a broad spectrum of policyholders.
Santam incurred R200m in net conventional claims related to the flooding in the region, while another net R100m was claimed through its specialist insurance division. Despite this, the section maintained “a strong underwriting performance”, within the limits of reinsurance requirements, the company said.
Santam said, however, it was in the early stages of mitigating potential losses stemming from natural disasters through the application of advanced technological tools that are able to identify insured property locations that are prone to climate change risks.
“The corrective underwriting actions implemented to date are having a positive effect, with further benefits expected into next year as we continue with the rollout of geo-coding, risk management and other measures,” CEO Tavaziva Madzinga said in a statement.
“Our geo-coding initiative, which creates a comprehensive risk-based view of property locations in SA, is progressing well and the value of losses prevented is steadily increasing.”
Geocoding provides a set of co-ordinates for each address, with the goal of allowing an insurer to understand the location of each building that is being insured and its proximity to various peril zones. The technology also enables experts to map and analyse climate data to identify areas that are particularly susceptible to climate change effects.
Santam uses the information it gathers from the geocoding process to take mitigating actions, to either exclude policies or to work with property developers and town planners on where it is best to build.
Santam, which is majority owned by Sanlam, is also looking to address the increase in large fire-related claims and attrition losses from adverse weather conditions, which it said was becoming a regular feature.
The conventional insurance business achieved net earned premium growth of 7%, with strong contributions from all businesses apart from Santam Re. The group’s net underwriting margin was below the bottom end of the target range of 5%-10% given losses from natural events and property fires.
Santam’s share price was little changed on the JSE on Tuesday at R278, valuing the company at R32bn.
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