Inadequate infrastructure management was flagged as a top risk for businesses in the next two years in Santam’s latest insurance trend survey. Consumers identified rising living costs, crime and unemployment as their top risks.
Nearly two-thirds of about 900 businesses, consumers and brokers surveyed in the 2024-2025 Santam Insurance Barometer between January and April reported that failing infrastructure posed a major risk to their businesses, and 83% said poorly maintained infrastructure would be their top risk over the next two years.
“Businesses and households flagged a range of infrastructure issues spanning deteriorating road and rail infrastructure, interrupted water supply, and the well-documented issues across the national electricity grid,” said Michael Cheng, group chief underwriting officer.
He said insurers were directly exposed to infrastructure failures as they insured dams and power stations.
Indirectly, they were affected by deteriorating ports, roads and railways because they had to pay out for losses their clients experienced due to poor logistics.
“Delays in clearing goods through the country’s major ports contribute to spoilage, forcing insurers to review cover for this peril. South African insurers have also had to accommodate the significant shift from rail to roads, the primary method for moving goods inland, leading to higher volumes of road traffic and road network deterioration,” he said.
The World Bank global container port performance index released last year ranked Cape Town as the worst of the 405 harbours assessed, with Ngqura north of Gqeberha second last. Durban and Gqeberha itself also ranked close to the bottom.
The Santam report described the 2022 KwaZulu-Natal floods as South Africa’s costliest insured event, with R17bn in claims and an estimated total economic impact of R54bn.
Cheng said the landslides caused by the downpours contributed to significant downstream flooding and property damage.
“Additionally, if the canals and waterways had been fully functioning, the industrial areas around the Durban port would likely have suffered a smaller impact.”
He said there had been fewer weather-related claims since 2022, but last year the number of claims exceeding R100m had soared in the Western Cape, Eastern Cape and KwaZulu-Natal.
Inadequate road maintenance, which is particularly poor in rural areas where potholes are common, significantly hinders the transportation of crops
— Daniel Stevens, head of Santam’s farm crop and heavy haulage division
“The continued encroachment of commercial, industrial and housing developments on 50-year flood lines remains a major challenge for insurers,” he said.
The report said Eskom’s improved power generation meant the threat of national grid failure cited in the 2022-2023 Insurance Barometer was off the table.
“Santam saw significant improvement in its power-surge-related claims due to a combination of reduced load-shedding, explicit top-up cover and the rooting out of fraudulent damage claims,” said Cheng.
Survey respondents ranked crime, economic instability and failing infrastructure as their top concerns over a two-year horizon. The report said agricultural businesses ranked weather catastrophes as their biggest risk.
Daniel Stevens, head of Santam’s farm crop and heavy haulage division, said 25% of farmers had flagged concerns over the breakdown in road, rail and water services.
“Inadequate road maintenance, which is particularly poor in rural areas where potholes are common, significantly hinders the transportation of crops from farms to silos, and to ports for international export,” he said
In some instances, farming communities have been forced to step in and repair unusable main roads themselves, adding to their already high input costs, he said.
“Farmers face a host of complex, interlinked risks. From our interactions with the industry, their biggest challenge is the sustained rise in essential input costs, such as chemicals, fertiliser and fuel, over the past several years, and which show no sign of easing.
“These increases are largely driven by global geopolitical factors, including the Russia-Ukraine conflict and the latest international trade tariffs,” he said.
Farm exports to the US will be severely hit if the African Growth & Opportunity Act (Agoa) is not renewed later this year.
“Agricultural businesses may find themselves facing margin pressures or having to seek out new export markets for their produce if the agreement is not reinstated or if trade tariffs become unsustainable,” Stevens said.
He said farmers feel the pinch immediately when inflation rises or production costs such as fertiliser go up, likewise with the cost of labour.
“Nevertheless, they have some control over the final impact of these factors as they can adapt by changing variables such as the planting area and the type of crops they cultivate, among other strategies. On the other hand, weather patterns, infrastructure challenges, and global geopolitical shifts are entirely beyond their control,” Stevens said.
The survey said consumers were grappling with high living cost, crime and unemployment. Respondents were particularly concerned about burglary, mugging and hijacking. They also claimed more for damaged geysers, as some parts of the country grappled with intermittent water supply.
“It’s worth noting that consumers’ perceptions often don’t match actual claims statistics,” the Santam report said. “This may be because consumers tend to reflect what’s top of mind, often influenced by media coverage, or because not all incidents result in insurance claims.”
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