Climate change poses the most significant threat for South African insurance companies and risks raising premiums and the cost of reinsurance, a top official at its biggest insurer by assets said.

After staying almost flat in the decade to 2020, the cost for reinsuring against catastrophic events for Old Mutual has climbed as much as 30%, according to Garth Napier, managing director at a unit.

In addition to Covid-19, reinsurance costs have jumped due to the worst flooding in almost three decades that drowned more than 400 people in landslides and washed away houses in 2022, he said in an interview Friday.

Reinsurers — the businesses that underwrite insurance companies — paid out R30-billion for that catastrophe. In total, the industry has reimbursed more than R100-billion for the pandemic, floods, and riots in the past three years, Napier said, citing data by from reinsurance broker Gallagher.

“The biggest concern for the industry is climate change driving a significant increase in the number of events that are happening,” he said. “There’s definitely some data to support that we are seeing an increase in frequency in South Africa and globally, and that the extent of the damage is definitely a lot higher than what it would’ve been in the past.”

Customers could see a 10% increase in premiums across the board this year, Napier estimated.

Last year, an investment-management arm of Old Mutual said it would vote against some resolutions at an annual general meeting of Sasol because of the petrochemicals and fuel firm’s poor record on climate targets. The company accounts for about a fifth of the South Africa’s greenhouse-gas emissions and releases a slew of pollutants. It has set a target of cutting emissions by 30% by 2030 and reaching so-called net zero by 2050.

South Africa is highly vulnerable to climate change and is ranked 96 out of 182 countries assessed under the Notre Dame Global Adaptation Initiative index. The economy is also at risk due to the nation’s dependence on rain-fed farming and natural resources, according to the World Bank.