Santam, South Africa's largest short-term insurer, acknowledges climate change as a significant operational challenge.
In response, the company has initiated the implementation of geocoding technology to mitigate losses resulting from increasingly frequent adverse weather conditions.
Geocoding technology involves assigning precise coordinates to each insured address, enabling Santam to accurately assess the proximity of insured buildings to high-risk areas. By utilising this technology, Santam can map and analyse climate data, identifying regions most vulnerable to the effects of climate change.
In its financial results for the year ended December 2023, Santam reported significant losses due to natural events, including floods in the Western Cape and hailstorms in Gauteng. The company also recorded a surge in fire claims, indicating the escalating impact of adverse weather patterns on insurance claims.
Continuous electricity supply disruptions outpaced past experience by a significant margin, increasing the risk of losses from power surge claims, the insurer said.
Being a data-driven organisation is a key strategic enabler of the refreshed FutureFit strategy, Santam said.
"We made good progress in driving value through better use of data, with several data-based use cases in the implementation phase. Among these is an expansion of our geocoding initiative, which creates a comprehensive risk-based view of property locations in South Africa," it said.
And the implementation of geocoding has already shown promising results, with approximately 86% of the core property book covered to date. During the Western Cape floods, Santam said it successfully avoided several losses through risk-mitigating actions facilitated by the geocoding initiative.
"We remain focused on the implementation of underwriting actions in response to the increase in frequency and severity of natural and fire-related losses.
"These include segmented premium and excess increases, more stringent limits on concentration risk, enhanced surveying, utilisation of reinsurance and co-insurance, and accelerated roll-out of the geocoding initiative," said Santam.
In a further demonstration of its commitment to addressing climate risks, Santam recently announced a partnership with the City of Tshwane to fight against risks associated with urban flooding in the capital city.
The initiative seeks to reduce flooding risks, minimise insurance losses, and create opportunities for skills development for unemployed youth, particularly in plumbing.
Additionally, the project aims to foster sustainable partnerships between the city and Santam while serving as a model for replication by other corporates to enhance service delivery in collaboration with municipalities.
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