South African tourism businesses may face further business insurance exclusions, like those encountered during the COVID pandemic, as the Insurance Industry continues to limit cover for ‘non-damage’ revenue loss – and losses related to power outages could be added to the list. One of the options on the table is to introduce exclusions for grid interruptions since outages can no longer be classified as ‘sudden and unforeseen’.

The devastating effects of recent natural disasters around the world (KZN included) have profoundly impacted the insurance industry. These so-called 'black swans' have led to an increase in loss ratios for many insurance companies. Actuaries are being called on to think ahead and identify potential risks and, after 15 years of loadshedding (and no short-term solutions in sight), grid interruptions and the associated damage and financial losses are seen as ‘predictable’ rather than ‘black swans’, which is why they are now the focus of actuaries' attention.

A climate of exclusions, rising premiums and risk management

What does this mean for businesses in South Africa? In addition to the potential exclusions from grid interruptions, short-term insurance such as property and vehicle insurance could become 10-15% more expensive in the coming months, according to the KPMG South African Insurance Industry Survey 2022.

However, there are a few things you can do to keep your insurance premiums from rising. As a property or business owner, prevention is always better than cure. You need to do everything you can to protect your investment.

Chat to your broker about conducting a thorough risk assessment, in other words, identifying any and all potential risks, and then take the necessary steps to mitigate them. Examples include installing surge protection devices (SPDs) to protect equipment from surge damage, or investing in back-up battery systems to keep the lights on (and your business up and running).

As we near the end of the year, it's a good idea to review your insurance policy and make sure you have the coverage you need in 2023. An experienced insurance broker will be able to find the right insurance policy to meet your business’s unique risks and requirements – and protect you from a potentially catastrophic financial loss.