Counting the real costs of hail: denting not just your car but the economy too

Personal Lines

Counting the real costs of hail: denting not just your car but the economy too

Published: 21 October 2016

A big hail storm has wreaked havoc in parts of Bloemfontein recently with claims for damage to homes and vehicles streaming in at South Africa’s largest general insurer, Santam today. In a short period of time a hailstorm on the M1 North of the William Nicol highway in Johannesburg can cause extensive damage to a vehicle. For the insurance industry, a hailstorm lasting 20 minutes in two to three Pretoria suburbs could cost up to R100 million in claims for damage to vehicles and homes.

Typically, the hail season occurs over the summer rainfall region of the country from October through to April. Historical data shows that every season has at least one or more hail event in which hail related insurance claims exceed R30 million.

The cost relating to hail damage for the South African economy in a financial year is enormous and proves how devastating hailstorms can be.  Counting the cost of hail is not just about the expenses related to vehicle repairs. Also included in the cost equation are the resulting inconveniences and related costs that impact the consumer, business and the overall economy.

Economic impacts include time lost due to traffic delays which further result in road freight and delivery cancellations. The additional cost of car hire and lost sales opportunities whilst the vehicles of representatives are undergoing repairs also contributes to the total cost.

“For the general insurance industry, hail events can result in a huge dent in the insurer’s income statements but that is what insurance is there for ” says Attie Blaauw, Head: Personal Lines Underwriting, at Santam. “Claims from these storms can often lead to very expensive repairs that can have a negative impact on motorist without adequate insurance cover, placing these individuals at serious risk of a major financial setback.”

It is for this reason that insurers like Santam, South Africa’s leading short term insurer, invest significant resources to mitigate the destructive impact of hail damage.

Blaauw explains:  “Santam has a specialist department employing professional engineers, hydrologists, geographers, analysts and actuaries assisting to  manage the potential impact of severe weather events and patterns. This is important when taking into account the effects of climate change and the increasing frequency of severe weather events. They help us to better understand the risk landscape - and to inform our policyholders about expected severe weather events, thereby helping them to mitigate potential risks.”

Predicting the likelihood of extreme hail events is a more complex process. It is not always possible to predict when and where hail storms may occur. It therefore becomes important to monitor and track weather patterns – particularly those that have the potential for storm or hail damage.  In geographic locations where there may be the likelihood of hail storms, we communicate this information to our policyholders via SMS and social media to alert motorists and homeowners to take preventative measures to mitigate their risk.  

“At Santam a special code is assigned to catastrophic events in order for these claims to be channelled to dedicated catastrophe management administration teams," says Blaauw. In February last year, Santam received reports in the Pietermaritzburg region about damage to vehicles and property as a result of quite a severe hail storm. During this period Santam's claims staff provided assistance to clients in respect of   temporary repairs to ensure usability of the damaged vehicle until final repairs could be carried out. During this hail event Santam registered approximately 1 600 claims worth R64 million.

Blaauw confirms that Santam arranged for additional insurance assessors from other regions to assist in dealing with the influx of the high volume in claims and made special arrangements with parts suppliers to ensure that there were no delays in the repair process. “We established a drive in centre with qualified insurance assessors and claims staff to process claims and co-ordinate repairs efficiently – and to get motorists back on the road as quickly as possible.”

Policyholders should ensure that they have adequate insurance cover in place – particularly for those that live within hail prone areas,” says Blaauw, “without the necessary insurance, consumers will have to foot the bill for repairs themselves – as well as the considerable cost and inconvenience that usually accompany such incidents.” 

Protect your vehicle and your home

  1. Make a note of covered parking garages in your area to ride out storms.
  2. Stock up on fleecy blankets. When a hailstorm hits, layer them on top of your vehicle to minimise damage.
  3. Drive cautiously during a hailstorm to minimise damage and further risk of accidents.
  4. If you’re caught in a hailstorm and can’t find cover, pull over at a safe location, grab the floor mats and put them on the roof, bonnet and boot lid. This solution has its limitations, but it will help to minimise damage to the vehicle.
  5. 5Clear gutters of debris regularly. Overflowing gutters could lead to water push backs and internal water damage.
  6. Close all blinds and curtains to prevent broken window glass from injuring you or your family.
  7. Make sure you maintain your trees to prevent any broken branches or debris causing damage to your home during a hailstorm.
  8. Always make sure that your home and household contents are insured for their new replacement value, and that your car is insured for its reasonable market value.