"With nearly 10 000 residents evacuated and homes, schools, structures, and power and communication lines destroyed, the impact on short-term insurance claims is likely to be substantial," Old Mutual says on their site.The insurer says that this could result in delays in the claims process. This, however, would impact residents negatively as they would have to dip into their savings. How well smaller insurers will be able to handle the impact of the huge number of claims is in question. Richard Hasson, an analyst at Electus Fund Managers, said in a report that the profit of these companies will be under pressure.
"In a weak economic environment, such as low gross domestic product growth and increasing unemployment, claims typically pick up, which will not be good for them. The recent fires and storms will affect the companies," he said.Some insurance companies, however, will be able to fall back on reinsurance, according to Business Day. This is essentially insurance for insurers, which can help limit losses following disasters. What has to be kept in mind is that claims will not only be coming from house owners but also business owners. According to the Western Cape government, around 30 tourism establishments were affected by the fires. Even larger insurance companies will see losses, but they will be able to contain them.
"Our government is committed to working with the local authorities to rebuild the lives of residents who have suffered great loss. This initial allocation of R75-million is a first step in this process. We will continually reassess the needs and priorities going forward," Western Cape Premier Helen Zille said in a statement.The provincial government is also requesting further funding from the National Disaster Management Centre and the National Treasury. Much of the dedicated funding is directed towards infrastructure and not rebuilding homes or relocating residents.