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Short-term insurers have seen a significant increase in claims as a result of the severe power cuts across SA.
Power surges cause damage to sensitive electronic equipment whenever electricity supply is restored, while car accidents increase when traffic lights and street lighting stop working. Burglaries also increase when the lights go out – and alarm systems shut down.
According to Anneli Retief, head of Dialdirect Insurance, the daily occurrence of load shedding in SA is much more than just a major inconvenience.
“Comparing the number of burglary incidents and the number of vehicle accidents when there is no load shedding to when there was load shedding, we found that burglaries increased some 3.2% and vehicle accidents by 5.2% when there is no electricity.
“Over weekends, these figures more than double. Break-ins increase by 8% and vehicle accidents rise by 13.5%,” she says, noting that Daildirect analysed claims data from July 2019 to May 2022.
“Power surges are also causing an increase in claims. A power surge takes place when the flow of electricity is interrupted and then starts up again, sending electricity back into the system. Power surges can cause instant damage to electrical appliances by melting plastic or metal parts and burning circuits,” says Retief.
Philippa Wild, head of commercial underwriting at Santam, says they have also seen a significant increase in claims for damage to sensitive electronic items due to power surges, across its personal insurance and commercial insurance portfolios.
“The reality is that load shedding has an immense impact on consumers and businesses alike, who must cope with the damage to appliances brought on by power surges and dips, as well as an increase in crime-related risks as a result of faulty security systems,” she says.
Wild says Santam has seen a definite increase in theft claims due to electric gates being put on manual, alarms not working, and dark houses.
Unfortunately, businesses cannot claim lost income as a result of load shedding.
“Business interruption cover, if purchased, provides cover for loss of income caused by a defined set of perils, which is provided in the insurance contract,” she says. “Damage caused by [a] power surge is covered, and the terms and conditions associated with this cover will be clearly defined in the insurance contract.”
Ricardo Coetzee, head of Auto & General Insurance, says it too has seen a big increase in road accidents.
“The dangerous consequences of load shedding [are seen] when street lights and traffic lights are not working at night."
“On the home front, when the lights go out, so do the alarm systems, gate motors and electric fencing. [This] makes it easier for criminals to gain access to your property – and spend longer in it,” says Coetzee.
He cautions that most insurance policies stipulate in their contracts that the house alarm must be activated at all times when the home is unoccupied.
“If your house is burgled during a power cut, then, theoretically, your theft-related cover would be moot,” says Coetzee, indicating that insurance companies might expect that systems that have standby batteries should be maintained properly.
“However, we believe that load shedding is beyond the control of our customers and they should not be penalised for it. As such, each case will be considered based on its own merits.”
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