How insurance is weathering the weather to build a resilient future – and why collaboration within the industry and between the private and public sectors will be key.
The last few years have seen South Africans face a tirade of extreme weather events, from flash floods and runaway fires to hailstorms and even tornadoes. But the frequency, severity, and cost of these events are rising fast.
“Climate risk is no longer a future threat. It’s here, growing, and already impacting insurers, their clients, and the broader economy,” says Momentum Insure Chief Actuary, Rudolf Britz.
As the insurance industry confronts an era of compounding climate shocks, Britz says insurers must adapt to the changing landscape. “We are seeing more frequent and intense weather events. It’s not just about rethinking risk models, but about being proactive with the tools and resources we have. We adjust our products and underwriting rules based on what we’ve learned from these events over time.”
Traditional risk models vs a changing climate
Traditional risk models rely on historic weather patterns to predict future claims. However, Britz notes that this approach is not enough to address the shifting nature of weather volatility. “You can’t simply use last year’s weather data to model tomorrow’s risk when the patterns are changing so rapidly. But we learn from the past and make adjustments based on the increased prevalence of extreme weather.”
To stay ahead of these changes, Momentum Insure is focused on using data-driven approaches to better understand emerging risks. “We work with various data sources to assess and predict where the highest risks are, allowing us to implement proactive risk mitigation strategies.”
Regulatory shifts and systemic adaptation
The industry is also preparing for tighter regulatory oversight on climate risk. Globally, regulators are requiring insurers to disclose their exposure to climate-related risks, stress-test their portfolios, and build long-term sustainability into their underwriting practices.
In South Africa, the Financial Sector Conduct Authority (FSCA) and Prudential Authority have signalled that climate risk will be a supervisory focus in coming years. For insurers, this will mean greater transparency, deeper scenario planning, and a shift toward long-term thinking in a historically short-term industry.
“We need to future-proof our business – not just to protect our balance sheet, but to ensure we can keep delivering on our promise to clients in a more volatile world,” Britz explains.
Building client and community resilience
For insurers, climate change is more than a pricing challenge – it’s a social one, too. As extreme weather events develop more frequently, vulnerable households are the hardest hit and lack adequate cover or are even priced out of insurance altogether.
Britz sees a role for insurers in not only protecting clients after the fact but also preparing them ahead of time. “We’re moving from a pure claims payer to a proactive risk partner,” he says. “That means using data to alert clients to severe weather, educating them about how to protect their homes and cars, and rewarding safer behaviour.”
As an example, he points to Momentum’s Safe Dayz™ programme, which uses telematics to encourage and reward safer driving – a key initiative as road conditions deteriorate following extreme weather events.
The path forward: public-private collaboration
Tackling climate risk at scale requires more than just private sector innovation. It demands coordination across insurers, government, and infrastructure planners.
“We need better data sharing, updated zoning laws, improved drainage systems and long-term urban planning that considers climate resilience,” Britz says. “No single insurer can do it alone.”
Momentum Insure supports broader collaboration across the industry – including discussions with reinsurers, regulators, and government bodies – to ensure the country’s risk management infrastructure evolves as fast as the threats themselves.
Despite the growing headwinds, Britz sees the evolving climate landscape and extreme weather patterns as a challenge that demands innovation and adaptation across the industry. “This is a challenge we must face head-on. As insurers, we have a responsibility not only to adapt but also to help others adapt. By staying ahead of the risk curve and standing alongside our clients, we can help South Africa weather the storm – and build back stronger.”