South Africa's relatively wealthy, developed economy and nearly three decades of political stability helped drive industry growth and draw in reinsurers. That's now helping add higher insurance premiums to the growing list of woes South Africans are already struggling with and could leave many exposed to heavy losses in the event of a power grid failure as reinsurers curtail coverage. As reinsurance rates go up, insurance firms tend to pass hikes onto their customers. Reinsurance firms cover insurance companies against major catastrophic events that would otherwise overwhelm them, allowing them to manage risk and reduce the capital they must hold for payouts.
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