Santam, a prominent insurance company in South Africa, is developing a technology-driven tool to aid underwriters in assessing properties' vulnerability to climate change-related incidents.
Named the Santam Underwriting Viewer, this tool utilises spatial intelligence technology to merge property addresses with scientific data on regions prone to environmental risks.
Big data and technology are helping to mitigate selected risks. Santam is already collecting and using geocoding data to understand risks better and reduce exposures to high-risk properties based on the likelihood of natural catastrophe disasters such as floods occurring in a specific area.
Using this information, underwriters can assess whether additional charges are necessary to cover climate change risks for clients' properties.
While Santam is among the first local insurers to adopt such technology, it is already widespread in the United States, United Kingdom, and Europe.
According to Santam GIS Technical Specialist Zelda Els, although clients may not be aware of the technology's application during the underwriting process, it provides significant benefits by enabling site-specific underwriting and preventing the imposition of policy conditions on properties located outside hazard-prone areas.
Els added that Santam's ongoing efforts to develop a dataset focusing on risks associated with veld fires. While localised studies have been conducted, expansion to a national level is needed for effective implementation.
Factors influencing risk assessment include vegetation type, land cover, wildfire history, previous fire claims, and topographical data such as slope.
This data will facilitate the creation of a fire hazard map, informing mitigation strategies and appropriate fire risk ratings for properties.
In a blog post earlier this year, Els pointed to the substantial costs borne by South African insurers due to climate change-related incidents, amounting to billions of rand.
Regarding the April 2022 KwaZulu-Natal flood, Els noted that insurers paid R4.3 billion in claims, with the sector covering a total of R27 billion.
The increasing frequency and severity of severe weather events threaten insurers' sustainability, necessitating measures to protect balance sheet integrity and ensure continued claim payments.
Els stressed the importance of leveraging technology and geospatial data to mitigate these risks and ensure the long-term viability of insurance coverage.
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