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SAIA Bulletin - May 2022






As the cold begins to bite, load-shedding continues to be the story of our lives in South Africa. For more than 14 years, electricity generation and supply have been interruptive to both the business fraternity and domestic consumers, but most importantly, a major concern for the insurance industry. The fluctuating electricity supply stages implemented by Eskom from time to time speak to heightened unpredictability and uncertainty, making a national grid failure a possibility. The world has seen national or regional grid failures in several countries, where the entire grid collapses, plunging the entire country or region into darkness without warning.

Such a severe power supply disruption will bring the whole of South Africa almost to an abrupt standstill. Energy generation experts and academics have said alternative energy through solar and wind farms will fall far short of bringing us back to life at a drop of a coin. Good examples of countries that have experienced such an immediate nationwide interruption include India which plunged 620 million people (50% of the country’s population) into darkness on 30 and 31 July 2012. Similarly, in 2009 an estimated 60 million Brazilians (nearly 30%) of the country's population, were plunged into darkness after an apparent transmission problem with power from the Itaipu dam. This serves to inform us that this is possible in SA, and the realisation of this risk has become even more imminent in recent years.

There is little doubt that in the last few years, the non-life insurance industry has continued to battle increasing risks, some of which are natural causes as  witnessed in KwaZulu-Natal in the last two months. From 11 to 13 April 2022, Kwa-Zulu Natal received over 300mm of rain in a 24-hour period causing extensive damage to domestic and commercial property, as well as infrastructure. The rapid fall of rainfall we recently witnessed across South Africa, and the failure by municipalities to effectively maintain and upgrade, where needed, stormwater drainages and other related infrastructure are issues that have been lamented by the insurance fraternity for years. Should this trend continue unabated, the likelihood of seeing cities and some urban centres drown in stormwater remains high, increasing the risk for insurers in the process.

SAIA has welcomed the launch and publishing of the Financial Sector Transformation Council’s (FSTC) State of Transformation Annual Report as Amalgamated for 2018/19 and 2019/20 financial periods. The report points to several challenges within the sector, and SAIA concurs and further acknowledges that more still needs to be done by the sector to drive transformation in areas including Ownership, Management Control, Skills Development and Access to Financial Services. There is no doubt that contributions by the smaller players in the sector certainly need to be accelerated. Indeed, the pace of transformation as broadly defined remained slower than the financial sector planned. However, it is pleasing to note that the sector has continued to make positive strides in advancing transformation in several areas. Please do see our Media Release on the SAIA website relating to transformation


Source: SAIA
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