South Africa recently earned bragging rights by becoming one of the few countries in the world with access to a country-specific climate index.
Developed for the Actuarial Society of South Africa (ASSA) by a multidisciplinary team of actuaries and meteorologists, the ASSA Climate Index enables users to measure the frequency of specific extreme weather events against a 30-year base period spanning from 1 January 1991 to 31 December 2020. The index is updated quarterly and is free to use as a result of generous funding provided by Old Mutual Insure.
Professor Rendani Mbuvha, actuary and lead developer of the ASSA Climate Index, says the index aims to facilitate informed risk management by insurers, medical aid schemes, policymakers, and anyone likely to suffer losses as a result of changing climate patterns.
“We hope this becomes a widely used tool to support climate-aware decisions at different insurers and financial institutions, and perhaps even outside of financial services. Actuaries, policymakers, researchers, and anyone interested in analysing and comparing different data sets will benefit from using the index, which offers users insights into climate trends across South Africa and their potential impacts on various sectors.”
The World Meteorological Organisation declared 2024 the hottest year on record, following 10 consecutive years of exceptional land and sea surface temperatures driven by human-generated greenhouse gas emissions. Mbuvha says South Africa’s short-term insurers are already incurring losses due to drought, floods, and fires caused by increasing climate variability.
He adds that during the testing phase of the index, the loss history from two large short-term insurers was compared to data provided by the index, showing a direct correlation between loss events and extreme weather patterns.
“These short-term insurers are now able to use the index to get an indication of whether there is an increase in the frequency of the extreme weather events in specific parts of the country that are likely to result in future losses. Not only will this enable insurers to price future losses, but with this data, they will also be able to create awareness among communities most likely to be affected.”
Mbuvha says the index will also be able to provide valuable insights to medical aid schemes and health insurers. He says medical aid schemes can, for example, overlay their own data over climate data from the index to identify patterns such as the correlation between weather events and utilisation rates of healthcare services during periods of extreme heat or cold.
“Climate research in the field of healthcare is interesting and likely to render insights that could help improve healthcare for communities,” comments Mbuvha.
He says similarly, government, civil society organisations and farming communities will also be able to use the index to understand changing weather patterns and predict an increase in the frequency of extreme events likely to cause losses.
“We already have firsthand experience of the devastating impact of climate change in South Africa, but until now, we had no idea of whether the frequency is increasing. The ASSA Climate Index changes this. We are excited, because the launch of the index also marks the first stepping stone to providing an industry standard for evaluating climate extremes.”
The launch version of the Climate Index allows users to track the following data from January 1981 to the end of August 2025:
• Occurrences of unusually high temperatures.
• Instances of significantly low temperatures.
• Periods of unusually heavy rainfall.
• Severity and duration of drought periods.
• Composite Index: A holistic measure that integrates all individual components to provide an overall climate extremity score.
According to Mbuvha, there are ambitious plans for the Climate Index, which include collaborations with insurers to align the index with claims experience. He is also hoping to expand the index to include predictive scenarios and broader geographical coverage across other African countries.
