One company pays South Africans R5 million a day

This was revealed in the insurer’s claim insights report, which analysed trends in the short-term insurance industry over the past five years. 

Falling under Standard Bank Insure, the company is one of the largest insurers of homes in South Africa, with a book of over R15 billion. 

The major risk identified by the company in this book is the increased regularity and severity of extreme weather events. 

Historically, these events were rare in South Africa, with it being largely seen as a catastrophe-free area. 

As such, these events, when they did occur, caused outsized damage and resulted in abnormally high claims. 

This could be mitigated by insurers through cross-subsidisation of premiums across regions, assets, and by encouraging investment in protective measures from businesses and households. 

As these events have become more regular and severe, insurers have had to increase the cost of coverage and implement new strategies to mitigate their impact. 

However, due to their increased regularity, these events have become more predictable and have enabled insurers to prepare for their occurrence. 

This shift has been coupled with changing client consumer behaviours, largely due to affordability issues, and changes in the value of assets in South Africa. 

Standard Insurance’s latest five-year analysis reveals that traditional risk models are being upended by new realities, requiring constant updates to insurer models. 

Over the past five years, Standard Insurance has processed and paid more than R8.5 billion in claims, covering households, vehicles, and businesses across South Africa. 

This translates to an annual average of R1.8 billion, or R4.9 million per day, being paid out in claims from Standard Insurance over the past five years.

Shifting landscape 

The rising frequency and severity of extreme weather have become the dominant protection risk for policyholders covering property in South Africa. 

Standard Insurance’s data shows that storms and catastrophic weather events are driving the highest volume of both home and commercial insurance claims. 

The data paints a picture of a sector where age, tenure, and lifestyle are increasingly shaping claim patterns, with elderly individuals or property being increasingly at risk.  

It also shows that weather, water, and fire dominate the risk landscape, and their impact is growing in terms of frequency and value. 

Meanwhile, policy tenure reveals behavioural fault lines, with notable spikes in claims around the fourth and eighth years of coverage, and long-term ownership introducing new risks tied to ageing infrastructure and vehicles. 

These changes and the rising risk from catastrophic events mean that the role of short-term insurance is changing rapidly in South Africa. 

Standard Insurance chief executive, Johan van Greuning, explained that short-term insurance was historically seen as a safety net that would step in after a loss to repair, replace, or compensate. 

However, it is now increasingly becoming a proactive enabler of protection and resilience through enhanced data analysis. 

One of the most transformative tools in this evolution is geospatial risk mapping. The expanded use of geocoding and satellite-based analytics allows insurers to assess exposure at a granular level, from flood to fire-prone zones and to tailor products accordingly. 

These capabilities are increasingly being used across the industry to support smarter underwriting, risk mitigation, and community-level resilience planning.

Despite these improvements and increased awareness around insurance in South Africa, short-term insurance still has a relatively low coverage ratio of 20%. In parts of Africa, it falls to 1%. 

This means that the majority of assets in South Africa are not insured, posing a potentially significant risk to the economy and limiting the ability of insurers to cross-subsidise risks and pricing. 

Issued on Daily Investor by Shaun Jacobs | https://dailyinvestor.com/finance/100619/one-company-pays-south-africans-r5-million-a-day/