Recent Cape fires and storm – what is the financial impact?

Coenraad De Jager, Executive for Commercial, Personal & Distribution at Old Mutual Insure.

Unpacking topical issues and how they impact ordinary South Africans.

What’s in the news?

Following the recent Cape storm and devastating fires along the Garden Route, many victims must begin the painful process of rebuilding their lives. 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. Unplanned events or natural disasters such as these are a reminder to check your short-term insurance cover.

What does it mean to be over or under insured?

Over insurance is when the amount of cover you have purchased exceeds the replacement cost (or actual cash value) of the risk, goods or property insured. Over insurance does not make financial sense as you will be paying for cover that will not be approved by the relevant claim assessor.

Under insurance occurs when the amount of cover you have is inadequate to replace goods or risk that you have insured. This could result in economic losses when you claim, as the claim payout will fall short of the actual loss that you’ll need to recover.

How does this impact South Africans?

Delays in the claims process, due to for example an increase in claim volumes after the recent storm, floods and fires, can result in further hardship for affected people and families. Short-term insurance cover is a key component of any holistic financial plan. Dipping into your savings in an emergency like the recent events can have long standing impacts on the financial wellness of you and your family. Seeking professional financial advice to build a robust, personalised plan will ensure that individual circumstances – and the associated risks – are taken into account so that there are no nasty surprises should the unexpected occur.

Did you know?

Old Mutual Insure has taken extra steps to make the claims process for those affected by the Garden Route fires as easy as possible. A dedicated, centralised claims email facility was established and a catastrophe van was dispatched to support the team in Knysna with the fast and efficient submission of claims. This includes non-motor assessors, motor assessors, a quantity surveyor, regional customer relationship managers, local assessors and Old Mutual Insure panel suppliers.

When a disaster hits, immediate access to emergency funds is vital. To provide some respite for affected parties, Old Mutual Insure will make an immediate preliminary payment of R10 000 on registration of each claim above R10 000. The Trauma benefit for allsure policyholders in the Knysna area will also be activated, so that they and their families can access trauma counselling where necessary. In addition to the interim claim related initiatives, various areas within Old Mutual – including employees – have come together to donate in over R700 000 to Gift of the Givers, a relief organisation who will distribute contributions to the affected families.

On a personal note...

Instances like this should encourage us to take stock of the plans we have in place for emergencies, or unplanned events. Check that fire extinguishers are in working order, that emergency numbers are visible and up to date and that suitable short-term insurance cover is in place with a reputable provider. If you already have a financial adviser, make sure you check in regularly to ensure your replacement values on assets are accurate and that you are adequately insured.