Extreme weather events – floods, droughts, typhoons and wildfires – and their frequency – are getting worse. In the past, these disasters were considered unpredictable, inalterable natural events. Today, extreme weather events are largely accepted as inevitable, and their severity and frequency influenced, if not caused, by human activity.
Climate change, coupled with other human-induced factors have increased the insurers’ risk dramatically. The tools insurers used to manage the risk of natural disasters – which are driven by environmental forces like seismic activity and geological processes and are generally beyond human control – are insufficient to protect the industry from the severity and frequency of current climate-related events. The South African insurance industry builds in additional resilience to lessen the impact of such an event.
In the past, it was generally accepted that human-caused disasters, including industrial and nuclear accidents, chemical spills and oil leaks, led to clear-cut claims of corporate negligence, malfeasance and the enforcement of environmental protection rights. These risks (including the risk of third party claims) could be assessed – if not accurately, at least appropriately – and a premium was charged accordingly.
![Blurred lines – [un]natural disasters and insurance risk](https://www.bbrief.co.za/content/uploads/2025/02/Blurred-Lines-Natural-Disasters-lhs-133x300.png)
Today, the line between human-caused and natural disasters is blurred – climate change, deforestation, inadequate infrastructure and poor urban planning can all cause or worsen a disaster.
Insurers have typically excluded damage caused by major events considered uninsurable. Challenges may now however arise if the policy language is ambiguous or when a seemingly natural event is worsened by human factors, like inadequate infrastructure or poor urban planning.
California wildfires – who bears the risk?
California has recently endured one of the most devastating wildfire seasons in history. The fires destroyed homes, businesses, and natural habitats across thousands of acres. Prolonged drought, unusually high winds, and unseasonably warm temperatures fuelled the fires.
Did human activity cause the fires or were they a natural disaster?…
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Read the full article by Donald Dinnie, Director and Danita Mungaroo, Candidate Attorney, Norton Rose Fulbright South Africa, as well as a host of other topical management articles written by professionals, consultants and academics in the February/March 2025 edition of BusinessBrief.
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