IIG Insights: Weather

“Riding the Storm” was the title of the latest IIG Insight session, where interesting topics like climate change, the correlation of climate change and economical crises as well as the usage of telematics in relation to weather were presented and discusses.

IIG Insights session: Weather

Mark Twain once said, “Climate is what we expect, weather is what we get”. Never before has this statement rung as true as it does now in the context of our current insurance market. The IIG’s 4th Insights session entitled “Riding the Storm” was held at GIBS on the 21st of May and focussed on the present and future impact of the changing weather patterns on the insurance industry.

The delegates in attendance included current president Daniel Stevens, past president Tracy McLaughlin, IIG Councilors and Class of 2018, along with industry professionals and guests from sponsor companies, Discovery Insure, Munich Re and Old Mutual Insure.  MC for the session, Head of the Education portfolio, Letlhogonolo Tau, commenced proceedings by welcoming attendees and introducing the esteemed speakers for the morning, whetting our appetites for what promised to be an informative and insightful programme.

The opening speaker Philippa Wild, Head of Vitality Drive at Discovery Insure, concentrated on the utilisation of telematics in conjunction with weather prediction to promote accurate and effective risk management. Philippa noted that 2017 was the costliest year in insurance ever recorded with global losses totalling $344 billion of which only 38.4% was insured. This translates into $132 billion in insured losses, which is 163% higher than the 16-year average from 2000 to 2016. It is hardly surprising that insurance companies have placed such a marked emphasis on effective mitigation of weather-related loss activity.

It was demonstrated that the integration of big data and the internet of things creates a powerful tool in monitoring client conduct, for instance driver behaviour. Overlaying the ability to forecast imminent weather events creates the opportunity to forewarn clients at risk within the affected area, aiming to reduce exposure and in turn the magnitude of the event loss. However, this is largely dependent on the clients’ responsiveness to the warning, which is an immeasurable and uncontrollable factor.

The next insightful session was presented by agricultural specialist Jutta Drewes and Head of Property Treaty for Sub-Saharan Africa, Thabo Twalo, both from Munich Re. The powerful duo reinforced the premise that the global catastrophes of 2017 have warranted intensive investigation into risk mitigation strategies within the property and agricultural arenas. They confirmed that natural disaster activity was increasing globally but the trends are more difficult to identify when honing in on Africa, and even more cumbersome when isolating South Africa. It was evidenced that continuing drought conditions in Africa are threatening food security and closer to home, this has dire consequences for the Western Cape.

Interestingly, South Africa is the only country in the agricultural space where drought loss is covered by the private sector and not the government. Involvement from the public sector will not only assist in transforming this into a more sustainable insurance model but also promote synchronicity within the segment to change the way farming is practiced in South Africa. It was concluded that digitalisation such as sensor-driven data collection and accurate crop forecasting will result in more efficient risk management, notably in line with the Discovery Insure strategy in the motor insurance space.

Key-note speaker Simon Gear, environmental scientist and broadcaster with over 20 years’ experience, provided a thought-provoking interpretation of climate change and its implications. He is firmly of the belief that global warming is caused by humans due to carbon emissions and that the growing population is only exacerbating the problem.

He drew an intriguing correlation between climate change and civil war, explaining that global warming and increased temperatures have an adverse effect on food prices inadvertently affecting the ability to put food on the table. This creates social instability which could possibly escalate into civil war, as evidenced in the Arab region in 2011. The crux of the presentation was that for most companies, environmental change risk will be indistinguishable from socio-economic and political risk.

In its pursuit of striving for excellence, the IIG Insights session provided attendees with a wealth of information and challenging opinions, which we hope will initiate constructive conversations within their respective companies. The IIG wishes to acknowledge and thank our sponsors, Discovery Insure, Munich Re and Old Mutual Insure, as well as GIBS for their cooperation and brand affiliation.


Article By: Neesha Parbhoo (IIG Councilor)