A January 2024 article published by the University of KwaZulu-Natal suggests that South Africa has seen a 60% increase in extreme weather events over the past two decades. This is Part 2 of a two-part series.

Extreme weather events like floods, droughts and storms are becoming increasingly common.

Extreme weather events like floods, droughts and storms are becoming increasingly common. Momentum Insure.

…continued from Part 1.

But can the insurance industry rise to navigate an evolving regulatory landscape all while addressing the very real social impacts of climate change?

Climate change risk defined

As governments and industry bodies introduce new standards to address climate risks, the regulatory environment is also evolving.

“We rely on the regulations to shape how we operate, so we can play a leading role in both disaster recovery and risk management. The insurance sector is positioned well to foster community resilience against major climate events.”

Beyond the regulations, Ngewu believes the larger issue of uninsured South Africans presents an additional risk. With most of the population being uninsured, the financial burden of rebuilding after climate disasters often falls on the government—further straining an already overstretched public sector. “There are options to innovate, such as investment in offerings such as parametric insurance which provides specific risk cover linked to catastrophic events. This protection gap not only hampers economic recovery but also weakens the nation’s overall resilience to future disasters,” says Ngewu.

A call to action for a resilient future

By harnessing data, embracing sustainable practices, and forging partnerships with regulators and communities, Ngewu says insurers can shift from merely reacting to disasters to driving proactive solutions that protect lives, livelihoods, and the environment.

As climate change continues to impact South Africa, the insurance industry is poised for transformation. “Insurers must redefine their role in society. This challenge is about more than just adjusting premiums; it’s about underwriting hope for a more secure future.

The industry’s response to climate change can inspire a future where insurance doesn’t just restore what’s lost but strengthens the foundation for a more secure, sustainable tomorrow,” Ngewu says.

Source: Momentum Insure.