Short-term insurers face massive flood claims

December 15, 2022

 Short-term insurance firms are facing massive insurance claims after a heavy rainstorm on Wednesday damaged property worth millions in Windhoek.

The Namibia Financial Institutions Supervisory Authority (NAMFISA) said it expects an increase in claims, but will only be able to quantify the impact next year after players in the sector have submitted their returns.

“Insurance claims are likely to increase in frequency and severity given the heavy storms experienced on 14 December 2022, unless flood risk is specifically excluded from the scope of cover.  The impact of the event will be assessed and quantified as soon as the information is submitted to NAMFISA during the review of the Q4 of 2022 financial returns which are due for submission on 1 February 2023,” NAMFISA CEO Kenneth Matomola told The Brief.

The insurance sector regulator added that Namibia’s short-term insurance companies have capacity to meet the claims, should they arise.

“The short-term insurance industry reported a net asset position of N$ 2.1 billion as at 30 September 2022 and has other risk mitigation mechanisms such as reinsurance cover. Information on the severity of the claims to be lodged with the short-term insurance sector is required in order to make inferences on the sector’s ability to settle the claims. This information is currently not available to NAMFISA.”

Matomola noted that part of NAMFISA’s mandate is ensuring that short-term insurers have adequate capital reserves to ensure policyholders’ obligations are met at all times.

“Should a policyholder’s claim be unjustly repudiated, the policyholder has recourse to lodge a complaint with NAMFISA. From a consumer protection perspective, NAMFISA provides recourse mechanisms at no cost to consumers of financial services that are treated unfairly by its regulated entities.”

The Namibia Special Risks Insurance Association (NASRIA) which had been hinted as the likely bearer of most of the claims from the floods was quick to point out that it did not provide cover for floods and thus, does not expect to receive any claims from the Wednesday flood.

“NASRIA Ltd does not cover floods. None of the claims will be paid by NASRIA Ltd since we do not cover floods. NASRIA Ltd is financially sound should a claim occur that is covered,” NASRIA Executive for Marketing Ndapona Schleberger told The Brief.

At the end of December 2021, the asset base of the country’s non-bank financial institutions sector grew by 13.9% to N$370.6 billion, mainly driven by pension fund and long-term insurance assets, which increased year on year, attributed to an increase in investment income from financial markets primarily equity investments.

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Last modified on Monday, 19 December 2022 19:02

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