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South African actuaries have unveiled the country’s first national climate index, a groundbreaking tool designed to track and analyze the frequency and severity of extreme weather conditions, such as droughts, floods, heatwaves, and unusually heavy rainfall. The index is expected to help insurers, financial institutions, and other stakeholders better understand climate-related risks and make more informed decisions.
The new climate index—developed for the Actuarial Society of South Africa and available free of charge—is updated quarterly. It enables users to monitor and compare the occurrence of extreme weather events against a historical baseline spanning 30 years, from January 1, 1991, to December 31, 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.
According to Professor Rendani Mbuvha, an actuary and the lead developer of the index, this initiative provides a vital resource for anyone analyzing climate data across the country. “The index offers insights into climate trends that can significantly impact various sectors of the economy,” he said in a statement. By providing access to long-term, location-specific climate data, the index allows stakeholders to evaluate trends and make strategic, climate-resilient decisions.
In its testing phase, data from two major short-term insurance companies was analyzed 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.
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Mbuvha emphasized that while the index is a powerful tool for the financial sector, its benefits could extend beyond insurance. “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,” he added.
Looking ahead, there are plans to expand the tool’s capabilities. Mbuvha aims to introduce predictive analytics and extend the index’s geographical scope to other African nations, ultimately creating a more comprehensive resource for the continent to navigate the growing challenges posed by climate change.
