The Actuarial Society of South Africa in collaboration with Old Mutual Insure have launched the country's first national climate index, that will help insurers, financial institutions, and other stakeholders better understand climate-related risks and make more informed decisions.
The new climate index will help track and analyse the frequency and severity of extreme weather conditions, such as droughts, floods, heatwaves, and unusually heavy rainfall and distinguishes itself from existing climate monitoring organisations by focusing specifically on South Africa while translating global data sources into actionable insights for the insurance sector. The platform incorporates data from sources like the European Space Agency, but processes it to identify extreme weather patterns most relevant to the South African region.
The climate index is available free of charge and will be updated quarterly. It enables users to monitor and compare the occurrence of extreme weather events against a historical baseline spanning 30 years, from 1 January 1991, to 31 December 2020. However, the data it offers stretches even further back, allowing users to track temperature anomalies, intense rainfall, and droughts all the way to January 1981.
In its testing phase, data from two major short-term insurance companies was analysed and compared with the index. The results showed a strong correlation between insurance loss events and extreme weather patterns, reinforcing the practical relevance of the index for the insurance industry.