By Favour Nnabugwu
Several insurers have withdrawn the coverage for electricity grid failures due to sharp increase in rolling power outages in South Africa
The insurers include Hollard, Momentum, Outsurance and Santam.
Unlisted insurance giant Hollard has informed its clients that it won’t be covering any losses caused by the collapse of the national grid. “While grid failure remains unlikely, it is unfortunately now a possibility and reinsurers have indicated that they will not provide reinsurance cover in this eventuality,” Hollard spokesperson Warwick Bloom told Moneyweb.
Santam, South Africa’s biggest short-term insurance group, said that it would, from 1 April 2023, cease providing cover for electricity grid failure claims. This will be applied on the renewal of policies and to all new policies.
“The unprecedented levels of load shedding and pressure from global reinsurers that require Santam to reduce its exposure to business interruption claims arising from failure of public utilities and public telecommunications has led to the insurer implementing a general electricity grid failure exclusion on all policies,” it said.
South Africa has faced load shedding every day for the past three months, with the electricity public utility Eskom implementing the continuous rolling power outages to prevent the grid from collapsing while it overhauls its aged coal plants and other infrastructure.
Meanwhile, the Ombudsman for Short-Term Insurance has said there could be no intervention in insurers changing their position on covering load shedding or grid collapse events because of the contractual nature of the insurance policies.