Bad news about insurance premiums in South Africa
South African businesses and households are facing higher insurance premiums and stricter cover conditions as the risk climate worsens in the country.
This is the feedback from Dini Nondumo, Head of Commercial Insurance at Standard Bank Insurance, who said the shift has been rapid and far-reaching worldwide, not just in South Africa.
In an interview with Classic Business, he noted that South Africa’s risk landscape is changing faster than many realise, and pointed to a combination of climate shocks, ongoing power instability, and a widening protection gap.
Nondumo explained that this is not just a local issue but part of a broader global trend that has intensified over the past decade.
“I think the risk climate and approach to risk has really significantly changed, especially over the last 10 years,” he said.
“A lot of this has been driven by all the large-scale environmental events that are happening more frequently.”
He cited major disasters both locally and internationally—from the KwaZulu-Natal floods and Knysna fires to earthquakes in Turkey and wildfires in Australia and the United States—as evidence of escalating risk exposure.
“All of these issues are really impacting the risk environment globally, and therefore how we interact with risk as a country, as an insurance business, and of course, to our clients.”
As a result, insurance is no longer a back-office consideration but a core financial priority. He added that businesses, especially, must integrate risk awareness into their broader strategy if they want to remain viable.
Nondumo said that a key driver behind rising premiums is the surge in claims linked to extreme weather.
“Over the past five years, we’ve really seen an increase in storm, flood, and fire-related claims—very massive increases. Storms alone now account for nearly one in every three property claims that come through,” he said.
Natural disasters are a major concern
Standard Bank’s data shows that weather-related claims, such as storms, hail, and floods, in 2024 alone, accounted for 41% of total claims.
“So it really is becoming quite an impactful thing, and it’s a wake-up call, I think, for both insurers and business owners.”
This growing frequency and severity of claims feed into pricing, pushing premiums higher as insurers adjust to the increased risk.
He also noted that a significant portion of losses in South Africa is uninsured, which is a major structural issue.
Using the KwaZulu-Natal floods as an example, He highlighted that while damages totalled R62.3 billion, less than 50% of those were insured, meaning more than 50% were uninsured.
The consequences of this gap are severe, particularly for small and medium-sized businesses.
“For a small and medium-sized business owner who’s uninsured, after a catastrophe like that, without the insurance protection, your livelihood has come to an end,” He warned.
He also warned that the impact extends far beyond the business itself, affecting employees and their families.
“It’s not just about the business owner’s property, but those 50, 100 to 1,000 mouths that those doors remaining open impact.”
In response, the insurance industry is shifting from a reactive model—simply paying claims—to a more proactive, data-driven approach aimed at reducing risk before disasters hit.
“Our goal is to make insurance a strategic tool for continuity and foresight, not just for recovery,” Nondumo said.
This includes using predictive analytics, satellite data, and risk modelling to guide business decisions.
“We’re increasingly leveraging technology to heighten and make our consumers more aware of how that data can help them in future-proofing and protecting their assets,” he explained.
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