Several South African insurance companies, including Hollard, Momentum, Outsurance and Santam, have announced they won’t be covering damages related to the failure of Eskom’s power grid. The companies made this decision after reinsurers – firms that provide financial protection to insurance companies – indicated they would not provide coverage in the event of a grid failure, leading insurance companies to consider it an “uninsurable event.” The companies have seen a significant increase in claims for damages to goods due to Eskom’s load-shedding. Load-shedding is different from a grid failure and generally, insurance companies pay out claims if a customer’s equipment is damaged due to a power surge.
By Hanno Labuschagne
Several big South African insurance companies won’t cover their customers for certain damages related to the failure of Eskom’s power grid.
Moneyweb first reported on the development after seeing an email that Hollard Insurance sent to clients notifying them of a new “Electricity Grid Failure” exclusion added to their policies.
Hollard spokesperson Warwick Bloom said that although a total grid failure remained unlikely, it was now a “possibility”.
Bloom said reinsurers — the firms that provide financial protection to insurance companies — have indicated they would not offer reinsurance cover in the event of a grid failure.
“This means that electricity grid failure — as defined in our letter to our clients — is an uninsurable event,” Bloom said.
“Along with other insurers, Hollard is attempting to make this clear for policyholders.”
Following this change to Hollard’s policy, MyBroadband contacted insurers to find out whether they were also introducing changes to account for total grid failure.
Momentum Insure chief actuary Rudolf Britz said the company did not cover grid failure itself, but the impact of grid failure continued to be covered.
“For example, if your car is insured through Momentum