South African households are navigating one of the most challenging short-term insurance environments in decades. Climate volatility, rising claims costs, inflationary pressure and tightening household budgets have converged to create a perfect storm – one where affordability is strained just as risk is escalating. For advisers, this moment demands a more strategic, more educational and more transparent form of engagement with clients.
According to Ryno de Kock, Head of Distribution at PSG Insure, “We are operating in a fundamentally different risk environment to five years ago. Advisers need to help clients structure portfolios that are both financially realistic and genuinely protective. The job now is balancing resilience with affordability but without leaving clients dangerously exposed.”
Structuring affordable, comprehensive portfolios in an age of volatility
The foundation of sustainability in short-term insurance is intelligent portfolio design. Advisers should begin every review with a structured risk-tiering exercise, which reframes the conversation away from cost and toward consequence:
Non-negotiable covers
These are the risks where a single event could result in financial devastation: home structure, vehicles, and personal liability. These should never be trimmed simply to reduce premiums.
Scalable covers
Contents, portable possessions and non-critical assets can often be right-sized by adjusting sums insured, limits or excess structures.
Deferrable or removable covers
Low-value electronics or optional add-ons can be deferred temporarily if budget pressures require it but only with careful explanation of the trade-offs.
This tiered framework gives clients a sense of control while maintaining the structural integrity of their protection.
How climate volatility is changing insurance pricing
Extreme weather events, from floods and hailstorms to runaway wildfires, have intensified across South Africa in both frequency and severity. This has fundamentally reshaped how insurers price risk. The industry is shifting away from retrospective pricing based on claims history and towards predictive catastrophe (CAT) modelling, incorporating:
- Updated hydrological and flood-plain mapping
- Wildfire and vegetation-dryness indices
- Climate trajectory modelling (including IPCC datasets)
- Soil subsidence and coastal erosion indicators.
The consequence is that a client can experience a significant premium increase even without making a single claim, simply because their property is now rated as being in a higher-risk zone.
“Clients often feel blindsided when their premiums rise despite a clean claims record,” says de Kock. “Advisers need to explain that the industry is moving from backward-looking models to forward-looking science. This is about future risk, not just historical loss.”
Proactive communication is essential. Clients should understand why their pricing is changing and how their adviser can still help them navigate adjustments without compromising core protection.
Preventing underinsurance in a budget-constrained market
Underinsurance is one of the most financially damaging – yet entirely preventable – outcomes in personal insurance. With household budgets under strain, clients often reduce sums insured or remove cover, believing they are making smart cost decisions. In reality, they may be absorbing catastrophic risk.
Advisers must help clients understand the average clause, a defining principle in South African policies. If a home worth R3m is insured for R2m, it is underinsured by 33%. If a storm causes R500 000 in damage, the insurer will pay only R333 000, leaving the client to fund the remaining R167 000.
Most clients assume underinsurance only affects total losses. Demonstrating its impact on partial claims is one of the most powerful education moments an adviser can offer.
Technology’s growing influence – and how advisers can use it to add value
Telematics, AI-driven underwriting, and digital claims processing are transforming the short-term insurance landscape. Advisers can turn these tools into tangible client value by:
- Identifying clients who are ideal candidates for telematics-based motor policies
- Using driving-behaviour data to negotiate renewals more effectively
- Helping clients understand which behaviours influence their risk score
- Monitoring deteriorating telematics profiles before they impact future pricing.
Telematics principles are also moving into home insurance, where smart water-leak detectors, security sensors and fire-monitoring devices increasingly influence pricing and claims outcomes. Advisers who stay ahead of these shifts can guide clients toward technologies that reduce both risk and premiums.
Advisers’ role in reducing fraud and claims inflation
Fraud and unnecessary claims are significant contributors to rising premiums. But advisers need to be educators. “The adviser’s duty is to the client’s long-term financial wellbeing,” says de Kock. “Explaining the consequences of misrepresentation or inflated claims is protecting the client.” Transparent conversations about risk behaviour preserve both integrity and trust.
Regulatory shifts and what advisers should prepare for
As COFI embeds Retail Distribution Review (RDR) principles, remuneration transparency will become more explicit and enforceable. Advisers who already practise clear, upfront disclosure are ahead of the curve; others need to align now.
In this environment, advisers who combine rigorous technical insight with empathetic guidance will stand apart. As de Kock notes, “Our role is not just helping clients buy insurance. It’s helping them stay protected in a world where risks – and costs – are increasing. That requires skill, honesty and the courage to have the difficult conversations. That’s where advisers add real value.”
