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South Africans are expected to face rising insurance premiums in the coming months due to a weaker rand and increased costs resulting from tariffs imposed on global trade.<\/p>\n
This is feedback from Ryno de Kock, the head of distribution at PSG Insure, who outlined how geopolitical tensions and rand weakness can impact insurance policies.<\/p>\n
De Kock explained that, while much of the global focus is on the impact of tariffs on major economies, South Africa is not immune to this effect.<\/p>\n
Tariffs, even if not imposed directly on South Africa, have the potential to significantly impact economic growth and export earnings for local companies.<\/p>\n
In particular, tariffs from the United States on South Africa\u2019s major trading partners \u2013 China and the European Union \u2013 are likely to impact demand for local exports.<\/p>\n
Apart from economic growth, increased global tension will put pressure on the rand as investors flock to safe-haven assets and move away from riskier emerging market assets.<\/p>\n
This has been coupled with domestic factors, such as instability within the Government of National Unity (GNU) and VAT hikes, which are likely to raise the cost of insurance.<\/p>\n
VAT hikes will directly increase the premiums South Africans pay for insurance, De Kock said. A weaker rand, on the other hand, will take time to filter through to monthly payments.<\/p>\n
Continued pressure on and depreciation of the rand fuel fears and add financial strain to a struggling economy, which already needs to deal with successive VAT increases over the next two years.<\/p>\n
These developments have an impact on all business sectors, including the insurance industry, and will filter through to consumers, De Kock explained.<\/p>\n
Most consumer goods in South Africa \u2013 including cars, electronic devices and household appliances \u2013 are imported.<\/p>\n
\u201cA weaker rand means that all these items cost more, which in turn means that their replacement values increase,\u201d De Kock said.<\/p>\n
\u201cInsurance companies are likely to experience higher claim values as the rand depreciates and may, in time, have to increase insurance premiums to cover these.\u201d<\/p>\n
De Kock gave a simple example of how a 10% decrease in the rand could affect your insurance in the coming months and years.<\/p>\n
If the estimated value of the home electronics included in your home contents insurance is around R200,000, but would now cost R220,000 to replace.<\/p>\n
\u201cGlobal development aside, your home or business still has the same risks it did before. But the consequences of a loss inadequately covered by your policy will be more severe now,\u201d De Kock said.<\/p>\n
\u201cAs the replacement costs of goods increase, it becomes more difficult \u2013 and in many cases impossible \u2013 to cover shortfalls out of your own pocket.\u201d<\/p>\n
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Standard Bank Insurance recently warned South Africans of the impact of a weaker rand on insurance claims from medical emergencies experienced overseas.<\/p>\n
It said that some of these claims run into the millions of rands and have the potential to cripple families financially who do not have adequate insurance.<\/p>\n
While many travellers have insurance for these emergencies, the rand\u2019s recent volatility has greatly increased the cost of any claims.<\/p>\n
Nadia Reddy, Head of Short-Term Products at Standard Bank Insurance, explained that a weaker rand against stronger currencies, such as the dollar and pound, can compound the financial strain faced by South African travellers.<\/p>\n
When combined with the global average medical inflation rate, which is predicted to remain above 10%, the risks of travelling uninsured are more significant than ever.<\/p>\n
\u201cThe volatile rand exchange rate means that costs abroad, especially in countries with stronger currencies, become exorbitant,\u201d Reddy explained.<\/p>\n
\u201cMedical treatments, emergency care, and hospitalisation in places like the US, UK, Canada, or Australia can quickly rack up bills into the millions.\u201d<\/p>\n
Without insurance, South African travellers may be faced with crippling financial burdens, often wiping out savings or accumulating debt to cover these unforeseen costs.<\/p>\n
The medical costs are also compounded by the cost to repatriate an individual if the medical condition requires it.<\/p>\n
The travel claims cases brought forward by clients of the broker business paint a stark picture of the financial burden associated with medical emergencies.<\/p>\n
For example, a 66-year-old travelled to Mauritius and needed extensive medical treatment for pneumonia and air ambulance repatriation, costing over R741,000.<\/p>\n
Similarly, a 69-year-old cyclist who travelled to the USA faced a staggering bill of R2.8 million after a fractured femur that led to further complications, including a pulmonary embolism.<\/p>\n
Other examples include an 83-year-old visiting Australia whose fall resulted in over R1.3 million in medical expenses.<\/p>\n
Another 63-year-old who travelled to Canada faced nearly R1.5 million in costs after treatment for a cerebral aneurysm.<\/p>\n
These cases highlight the unpredictable nature of medical emergencies and the immense financial strain they can impose.<\/p>\n