Coastal Property May Become Uninsurable

November 2 - As the earth warms up and erratic weather patterns become the norm, insurance groups are warning that some of South Africa's coastal properties are so much at risk that that could even become 'uninsurable'.

Climatewise, a group of insurance companies that deals with the effects of changing weather conditions on the industry discussed the issue at a conference in Cape Town last week, pinpointing certain threats facing oceanfront properties in the country.

Fears have been expressed that some insurance groups may find that certain properties are so much at risk that they are not worth insuring.

Even if this worst-case scenario does not occur, there are very real signs that these coastal properties will be subject to much higher premiums in the future.

In recent years, weather conditions have changed so that flash floods and random storming are not unheard of.

"Like we saw a few days ago, suddenly in Cape Town, you have hail," said the Head of Executive Risk Services of Santam, Hendry Nigrini.

Santam is a member of ClimateWise and is considered an expert in property insurance.

Nigrini doubted that conditions would become so bad that properties would become 'uninsurable'.

"We don't want to have any knee jerk reactions," he said. "If a client is in a high risk area, we will discuss ways to minimize the risk and charge higher premiums or perhaps a specific excess."

"We have always had a client-centric approach," he added.

The United Nations released worrying figures recently, including the fact that by 2020, up to 200 million people around the world could be exposed to increased water stress.

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11/2/2009 9:33:57 AM