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SAIA urges consumers and business to proactively protect their assets during loadshedding

SAIA urges consumers and business to proactively protect their assets during loadshedding
03-10-22 / Chris Smit

SAIA urges consumers and business to proactively protect their assets during loadshedding

Johannesburg - The South African Insurance Association (SAIA) today made an urgent appeal to consumers and businesses of all sizes to take every reasonable step to prevent or reduce business interruption and potential property damage emanating from loadshedding.

SAIA members continue to process a surge of claims connected in some way to loadshedding, but the association says that there is still no substitute for reducing and preventing potential loss.

Insurance claims most directly related to loadshedding include damage to appliances, electronic goods, electrical wiring, and fires. Claims less directly related include burglaries when fences and alarm systems fail and motor accidents where traffic lights are part of loadshedding.

While business is deeply involved in supporting the efforts of government and Eskom to address the power crisis, SAIA believes that immediate practical steps must be taken by all holders of insurance policies to manage the risk of their respective exposures.

SAIA further urges policyholder not to make assumptions about what sort of damage related to loadshedding is and is not covered in specific wordings of policies.

Consumers and businesses should heed the lessons of recent years and take time to check their policies closely for what is and is not covered when loads are shed. Where things appear uncertain or complex, an insurance intermediary (or broker) is best equipped to provide the proper advice. If you do not have a broker, contact your insurance company directly.

Insurers continue to honour claims where policies include consequential or business interruption loss or property damage to electronic goods and appliances. However, the sheer volume and value of claims so far in 2022 has forced insurers to take a variety of underwriting measures in response to this risk exposure.

While each insurer responds differently and at a different pace, generally, these measures include separating out future cover for loadshedding-related claims with a separate risk adjusted premium and/or increased first amount payables or excess.

This allows consumers to make a specific choice about what they wish to have covered including an understanding of what they are covered for. Certainty of what the consumer is covered for is the number one priority that insurers have.

The onus is on the consumer to make sure that they have a fundamental understanding of what they are covered for and what limitations if any are included in their respective insurance policies.

In addition, the industry must remain sustainable in the long run and therefore risk adjusting the premiums is one of the necessary steps to ensure the industry remains sustainable.

However, SAIA and its members are most concerned not only about the increasing risks and the necessary pricing adjustments, but also about the potential impact on affordability among some consumer segments and Small and Medium Enterprises (SMEs).

SAIA urges consumers to act now because a great deal of the damage caused by power surges and other issues related to loadshedding can be prevented or at least mitigated.

Some of these measures include:

  1. Have a certified electrician install surge protection in a home or business premises, especially in older buildings;
  2. Businesses in office parks and any other kind of premises must not assume that sprinkler systems and fire hydrants are working. Have these facilities checked by the property owner or arrange for it yourself. It must be noted that the safety of the employees is the responsibility of the tenant and the landlord. Compliance with the Occupational Health and Safety Act is therefore critical;
  3. Businesses can also consider investing in a generator. This reduces loss of business due to a lack of electricity and mitigates the risk having to claim from your insurance policy for this loss of revenue where business interruption has been included in the policy;
  4. Using affordable surge protection plugs and multiplugs that are available at supermarkets and hardware stores;
  5. When loadshedding starts, turn off plugs of sensitive appliances such as fridges and TVs and turn them back on only a few minutes after the power is restored;
  6. Purchase small and affordable fire extinguishers for the home and car. Never use water on electrical fires; and
  7. Ensure that alarm systems, electric fences and motorised gates have back-up batteries and are serviced with the service provider.

Obtaining proof from the installer or supplier that these steps were taken can potentially reduce the insurance premium and also ensures that when there is a claim, the claim can be processed fairly quickly.

These are very difficult times for South African consumers and business owners. However, we should not feel helpless. 

There is a great deal that consumers and business owners can do to prevent potential losses and manage their respective risks. You still have considerable influence over how much you pay and the probability of having to claim. It requires some effort but will always be worth it.

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