Johannesburg - South Africans with short term policies have been receiving policy updates from their underwriters recently warning that they aren’t covered in the case of a total grid collapse. It is a sobering thought – on many counts. It’s also very galling, since there can be no more of a grudge purchase than short term-insurance.
Despite what you might see on TV of happy clients getting the keys to new cars or being filmed sitting in brand new offices/ factory spaces/ homes after a catastrophic occurrence that destroyed their previous one, insurance companies don’t have that much of an appetite for risk.
It’s all about averages – a little like going to the casino: someone has to be seen to be winning to ensure the rest of keep putting down their chips, but in the end the house always wins. In a casino, if someone is found to be winning too often or, heaven forbid, has discovered a way to game the system, they’ll be invited to leave.
With insurance, if you claim too often, your risk profile goes up; your excess jumps until it’s almost exorbitant and if that doesn’t stop you, you can be declared uninsurable. It’s one of the reasons why there is such a thorough screening of prospective clients to try to establish how accident prone or claim happy they might be.
Most of us accept the downside of the fine print in the encyclopaedic terms and conditions of our insurance contracts for the promise of restitution to what things were like before the pawpaw hits the fan. The problem is, the insurers have now decided it’s not worth their risk if there’s no power for the fan and too many pawpaws.
It’s easy to be outraged at the perfidy of the insurance companies – by those of us who are insured; incensed that we are now uncovered, even though our premiums are still being increased. But who are we kidding? They are only doing what they’ve always done. When the going gets really tough and there’s no margin for them, they bail.
What we should be outraged by is the fact that despite the government’s protestations that everything is under control, even as ruthless tenderpreneurs are causing South Africa to involuntarily decarbonise its national grid, our insurers have taken the opposite view. They’ve obviously decided that there is such a risk of a national grid meltdown that it could ruin their businesses – so they’ve excluded it from their schedules of cover.
It’s a particularly bitter irony given our history: In the last days of apartheid, when this country was in a civil war: an almost daily looting of shops, torching of delivery vehicles and stoning of cars, insurance companies didn’t uninsure. Instead, the government created SASRIA – effectively a state short term insurer. Today the risk of grid failure and social meltdown is now so great that SASRIA has opted out – and everyone’s followed suit.
That’s the real prognosis of where we are. So, how long will it be before insurers stop paying out on life policies for cholera-related deaths?