Are You Adequately Covered: Catastrophic Claims.
South Africa has been facing climatic changes and these changes have an impact on the insurance market. The changing climate patterns amplifies risks related to property and infrastructure damage, agricultural losses, and health emergencies, putting a strain on insurers. The country has been experiencing extreme weather events such as, floodings, raging wildfires and the recent hail storm of Monday 13 November, which affected some parts of northern Johannesburg.
These events have contributed to the frequency and severity of catastrophe claims. Catastrophe reinsurance, often referred as “cat cover” is a type of insurance that protects an insurance company against severe financial losses resulting from catastrophic losses such as natural disasters or large scale accidents. It kicks on when the cumulative losses surpass a predetermined threshold, helping the insurance company to manage the financial impact of wide spread and costly claims.
As Maksure Risk Solutions, we advise insurance companies to have cat cover in place. Catastrophe reinsurance helps insurers manage their exposure, and plays a pivotal role in stabilising the financial impact caused by these large scale and unpredictable events.
In relation to the recent hail storm damages which affected properties and infrastructure, as Maksure, “we advise insurance companies to create a cat claim code where all the cat claims are registered against. The moment the aggregate claims exceed 50% of your deductible quickly notify your reinsurers, subject to treaty conditions”, says Wilfred Ncube, Head of Treaties and Claims. Notifying your reinsurers at an early stage helps reinsurers reserve accordingly and also allows reinsurers to quickly mobilise assistance should it be needed by an insurance company.
As more information becomes available, the insurance company needs to manage reserves and maintain claim estimates. It is also important to keep reinsurers abreast on the developments of these claims. Once all the claims have been finalised, and the insurance company has paid the insureds, then the insurer can now prepare to recover from the cat reinsurers.
Wilfred Ncube is the Head of Treaties and Claims at Maksure Risk Solutions.
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About Maksure Risk Solutions
Maksure Risk Solutions is an Afro-Global independent specialist insurance and reinsurance broker with business footprint in Africa, Asia, East & Western Europe, South America and the Caribbean. We provide innovative and tailor-made risk solutions in Insurance and Reinsurance as well as Risk Financing and Actuarial Consulting geared towards capital management and strengthening our client’s balance sheet. Maksure is also one of the major players in Captive Management (Establishment & Management) in South Africa, Mauritius, Bermuda and various other jurisdictions. We have access into the Lloyds of London with a deep understanding of African markets. Our global nature ensures that our clients access quality capacity as well as some of the world’s latest thinking and solutions.