South African Insurance Association

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Cape Town Water Crisis and the impact on the industry and policyholders

The South African Insurance Association (SAIA) is aware of the ongoing media reports of an imminent water crisis in Cape Town which has raised the level of awareness of a possible prolonged period of interrupted water supply. This is true for Cape Town but also possibly many other cities and towns within the country.

Day Zero in Cape Town is fast becoming a reality for many businesses and people of Cape Town. Day Zero is the day that many businesses and households will be cut-off from the municipality water supply, with only pre-determined areas and organisations allowed to access the municipality water supply.

From discussions held with various stakeholders it is clear that all levels of Government are engaging in various activities to prevent the risk of this happening and we note that Day Zero keeps on being pushed out into, what hopefully will be, the usual raining season.
It is important to note that drought is in many cases not an insurance peril covered by South African insurers. Therefore a Day-Zero (and after) event could have an unexpected impact on policyholders in the event of an insurance claim.

We therefore advise policyholders to contact their brokers and/or insurers directly to understand what would be covered and not covered in the event of a Day-Zero and thereafter.

For more information, contact:
Nico Esterhuizen, GM Insurance Risks