We all know that climate change is real and is having an impact on the world around us. That’s why many of us have gotten super passionate about recycling, thrifting instead of buying new when we can, and keeping our valuables for longer instead of going with the trends and updating every 2 minutes. What you might not have realised is that climate change could be reshaping the insurance landscape, particularly for homeowners.
Wondering what we’re talking about? Well, hang with us for a sec. You see, as extreme weather events become more frequent and on the more serious side (think about the recent KZN floods), it makes sense that you would need to understand the implications that climate change has for home insurance.
Here’s how we think climate change could affect home insurance and what you can do to prepare.
Weather events, AKA natural disasters, are on the rise
Global temperatures are steadily climbing. We’re not climatologists or anything, but even we can make the leap that this means that the likelihood of natural disasters happening, like floods, hurricanes, and wildfires, is higher. We even checked with the Intergovernmental Panel on Climate Change (IPCC), which confirms that the frequency and intensity of extreme weather events is expected to increase.
These natural disasters have a habit of affecting us humans in a variety of different ways, including our homes. Just think back to the 2022 floods in KZN, where least 13,000[RdB1] homes were damaged. The floods weren’t an isolated situation, with more flooding in KZN taking place in 2024.
The point we’re making is that if these types of events are going to happen more often, then we need to be prepared.
How will this affect the insurance industry
From our side, because we’re insurance-mal, we’re specifically thinking about what this will do to the insurance industry. Clearly more disasters = more claims and this = higher costs for insurers. With this in mind, we reckon that there will be 3 main changes…
1. Climate-based data will take the main stage
You know how we use all sorts of data to create your personal insurance risk profile? If you didn’t know, then we take details about who you are (like where you live, your age, etc.) and the item you want to insure to create a risk profile. That is to say, we look at how risky it is to cover your car or camera, or whatever it is. What we think will start happening in a bigger way, is that the industry will start reevaluating risk assessments based on climate data.
What this could mean is that areas previously deemed safe could be considered high-risk, leading to increased premiums.
2. A higher risk of climate-related claims
We’re also thinking that the insurance industry is going to use climate-data to predict increases in climate-related claims, and in response to this, insurers could end up raising premiums to cover potential losses. It’s quite possible that this will be reflected the most in home insurance policy premiums.
3. More exclusions
Our final thought is that some insurers could start excluding certain risks related to climate change from their policies, such as flooding or earthquake cover. Rather than these risks and perils being automatically included, you may have to pay extra to bring these risks back into your policy.
So, what should homeowners do
First of all, don’t panic. Nothing is happening right now, at least, certainly not in our kingdom. But it’s worth being aware of what could happen in the industry so that you can take proactive steps.
Remember, our goal is to make sure that everything is explained in terms that make sense and everything that we do is to make sure that you have the cover you need and that you are paying an affordable premium.
The last thing we want is for you to be without the king’s protection.
If you want to make sure that your home insurance is doing what you want it to do, then we’ve got some handy tips.
- Take stock: Look through our policy docs to understand what is and isn’t covered so you can be sure how we’ll be there for you when it rains, the ground shakes, or the wind comes a-howling.
- Be proactive: Consider reinforcing your home against storms, installing sump pumps to prevent flooding, or creating defensible space to protect against wildfires.
- Stay informed: We’re not saying that you should become a weather forecaster, but maybe keep tabs on local climate trends and how they may affect your area.
- Bundle up: If you keep your car and home insurance with the king, you could enjoy some discounts on your premiums, so chat to us about how we can help you make your cover even more affordable.
The king has your back and your castle
There is lots going on with the world right now, including climate change. We hope that by giving you a slice of news with some insurance tips on the side, you’ll be prepared to handle whatever life throws at you. Of course, if you don’t have the king’s cover in your life and want to know how you can get cover that’s for sure-sure going to be there for you, no matter the weather, then click here. Or you can WhatsApp us on 086 50 50 50 and we’ll chat you through the process.
Psst… This blog provides general info only, and doesn’t count as financial or product advice from King Price or our legal and compliance experts. Remember, all our premiums are risk-profile-dependent, and T’s and C’s apply. Our most up-to-date KPPD (policy wording) can always be found here.
Our website T’s and C’s can be found here.
[RdB1]https://www.jbarisk.com/products-services/event-response/south-africa-kwazulu-natal-floods/
