Global Natural Disasters Affect South Africa's Insurance Market

South Africa insurance market affected by global natural disasters $42 Billion paid out to victims of natural disasters globally in the last couple of months.

In four short months, the world's global insurance market has seen payouts over over $40 billion due to a chain of natural disasters in different areas around the globe.

If things continue in this way, South Africans may well find themselves paying higher premiums as these payouts impact countries all over the world.

A soft domestic market has ensured that South African short term insurers are doing relatively well right now; however, any more natural disasters could change this.

Another major catastrophe could make it difficult for overseas re-insurers to underwrite risks, and rates may harden in the South African market.

According to the Managing Director of Alexander Forbes Insurance, short term insurers "are watching this year's hurricane season in the Gulf of Mexico with baited breath."

"Only four months into 2011, the global insurance industry is already looking at a payout of $42 billion, with January's wild fires and then floods in Australia yet to be added," said Gary Dombo.

A second earthquake in early 2011 left the industry footing a $12 billion bill, followed by the earthquake in Japan which could cost insurers over $30 billion.

These numbers are being compared to payouts in 2009 of $27 billion, followed by nearly $43 billion in 2010 due to earthquakes in Chile and New Zealand.

Gary Dombo believes that while the South African market is currently secure, this could change at any time.

"Now more than ever, consumers should look to the small print to establish exactly what it is their insurer is covering, especially if they are offered a cheaper premium which will inevitably cover less risk," he warned.