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No need for alarm over surge in flood and fire claims - expert

Jan 12 2017 18:31
Liesl Peyper

Cape Town - Insurance companies are well equipped to deal with claims arising out of natural disasters, such as wildfires and floods, says Dawie Buys, insurance technical adviser at the South African Insurance Association (Saia).

Insurers will in all likelihood see a surge in claims resulting from wildfires in the Western Cape that have been raging for more than a week now, as well as floods in parts of Mpumalanga and Gauteng, following heavy rainfall in these areas, which caused significant damage to houses, buildings and infrastructure. 
Buys is confident, however, that insurers would be able to absorb these claims comfortably. 

“History has shown that the insurance industry is resilient and there is therefore no concern for alarm,” Buys said. In addition, most direct insurers are furthermore protected through re-insurance for catastrophes and Saia does not expect that there will be any drastic action that insurers need to take.

READ: 2016 to be a tough year for insurers 

Although Saia could not give any numbers with regard to claims as a result of the fires and floods, as not all its member companies, among which Santam, Hollard and Mutual & Federal, have the same financial reporting periods. 

“It is therefore difficult to predict how the bottom line of the individual insurers will be affected, as insurers provide for reserves for claims incurred, but not reported yet at the end of each financial year,” Buys said. 

Short term insurers could not yet quantify the amount of claims it received as a result of damages caused by fires and floods. 

READ: Impact of East Rand declared catastrophe zone by insurers

Western Cape MEC for Economic Opportunities Alan Winde said the damages caused by the fires total millions of rand and that it would take years to restore buildings, vineyards and infrastructure in some instances. 

Read Fin24's top stories trending on Twitter:

floods  |  wildfires  |  claims  |  insurance industry
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