Insurance companies refusing to cover total Eskom grid collapse a good thing — ombud

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Reinsurers have told insurance companies that they will no longer cover a grid collapse, forcing insurers to amend their policies.

South African consumers should view insurance policy exclusions for a total grid failure as a good thing, as the industry could collapse without them.

“If insurers were to carry these losses, there is a very good risk that it could collapse the industry. Then we end up with absolutely nothing,” Nkhuna added. He explained that one of the issues some insurers have raised — the loss of backing for a total grid collapse from their reinsurers — is primarily to blame for these exclusions.

“They [insurers] also face that gap on their side, and without the backing of reinsurers, they would also be exposed,” he added. The insurer attributed the change to a need to review its cover in light of the higher risk of a blackout.

 

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