Electricity Grid Failure
|As the impact of the loadshedding and other power outages continues to grow, it has become essential for insurers to consider the possibility of Electricity Grid Failure and the consequent impact on the policies the underwrite.
Reinsure participating on South African treaties have informed Xenturion that they will not provide support for losses arising from Electricity Grid Failure. The sustainability of the industry is paramount, and hence this decision had to be made.
Electricity Grid Failure has therefore been deemed and uninsurable event.
By Electricity Grid Failure, we mean “Electricity Grid Failure is an interruption to or suspension of electricity supply, in any manner and from any source, and for any reason (including damage and any inability and / or failure on the part of the supplier) which affects and entire municipality (including local, district, regional or any other level that is created by law) or province or suspension at the reconnection or reinstatement of electricity supply”.
This exclusion also applies to consequential losses in respect of any public utilities that are affected by Electricity Grid Failure, including but not limited to, the disruption of water, telecommunications, and sewage systems. It also applies to other consequential losses, such as the deterioration of any food or other items.
What does this mean for Xenturion clients?
While Xenturion offers various cover options, our policies were never intended to cover large-scale failure of the electricity grid. We are therefore left with no alternative but to exclude any losses arising from Electricity Grid Failure and any resultant damages from all policies. This includes damage form power surges occurring as a result of recovery from Grid Failure.
This exclusion will be added to all affected policies with the effect from 01 April 2023 in respect of new and existing business.
This will apply to all Commercial Lines, Agriculture, Hospitality, Sectional Title and Personal Lines policies and wording variants thereof including Bespoke Wordings and Assets Policies.
This exclusion does not apply to Loadshedding (defined below) which remains covered subject to the terms and conditions in your policy. Loadshedding is the intentional, total or partial withholding of electricity supply (from any source) by any party other than the insured, implemented in phases, which do not affect a municipality (including local, district, reginal or any other level that is created by law) or province or the country at substantially the same time.
As well as providing you with a clear definition of the excluded event, we will also be providing an endorsement, along with a list of frequently asked questions which aim to limit any potential ambiguity.
What do you as the broker need to do?
* Send the attached letter to all you existing clients by the end of February 2023, giving clients 31 days’ notice of the change in cover.
* The process will differ slightly for broker-issued policies (i.e., on Third Party systems), where you must add the letter as e mail merge on your Third-Party system so that a record is kept for compliance purposes.
* The letter is an interim measure for existing business, until such time that the policy wording is updated to include this new exclusion. Once you have received the update policy wording form us, please use this new wording for renewals and new business.
Please review the attached documents for the appropriate action you will need to take immediately.
Letter of Personal Lines clients
Letter of Commercial Lines clients
Endorsement for five policies
Thank you for your assistance in ensuring implementation of these actions. Should you have any further queries please do not hesitate to contact us.
Download the documents here:
PL Grid Failure Client Letter
CL Grid Failure Client Letter
CL Electricity Grid Failure Exclusion Agri
CL Electricity Grid Failure Exclusion Commercial
CL Electricity Grid Failure Exclusion Hospitality
CL Electricity Grid Failure Exclusion Sectional Title
Electricity Grid Failure FAQ
Electricity Grid Failure Commercial Property Assets
Electricity Grid Failure