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- From 1 May, Momentum Insure will cap power surge claims payouts to R10 000 per event to avoid raising premiums.
- Customers who want more coverage for load shedding-related claims will have to stomach higher premiums.
- Other insurers, such as OUTsurance and Bryte Insurance, have increased excesses customers pay for power-surge claims.
- For more financial news, go to the News24 Business front page.
Momentum Insure will reduce the amount it pays out for power surge claims on 1 May.
The Centurion-based insurer sent a letter to its customers informing them that power surge cover under their buildings and contents policies will be capped to a maximum of R10 000 per claim. Customers will still pay a standard excess of R3 000 per incident for all power surge claims.
It wrote that the changes were necessitated by "the significant increase in power outages across the country, the inconsistency of the current provided to homes and businesses, and the increase in power surge-related claims."
Previously, the insurer only committed to covering loss or damage caused by power surges or dips without putting a limit on the payable claims.
If people want to be covered for more than R10 000 per event, they'd have to cough up more in terms of their monthly premiums. Momentum Insure said customers can increase their default cover with extended power surge cover up to a maximum of 30% of the total sum insured.
Momentum is not the first insurer to try to hedge its risks against power surge claims. OUTsurance and Bryte Insurance are among those who have implemented larger excesses for these claims.
READ | All big local insurers pull grid failure cover as 'unprecedented' load shedding spooks reinsurers
Power surge claims have become a significant risk for SA's short-term insurers. In its latest financial results presentation earlier this month, Momentum Metropolitan Holdings attributed the jump in Momentum Insure's claims ratio partly to "increased frequency of incidents due to power surges".
SA's biggest short-term insurer, Santam, recorded a 60% increase in power surge-related claims at the end of June 2022. However, earlier this year, its CEO, Tavaziva Madzinga, said these still account for a negligible portion of the claims Santam paid for the full 2022 financial year.
Discovery received an average of 300 power surge-related claims weekly in its personal lines business at the peak of load shedding in June 2022. All this was before the unprecedented days of Stage 6 load shedding in February this year.
