At the coal face of the #Knysna Fires

The Knysna fires changed the South African risk landscape completely. A risk that was not necessarily regarded a significant one in terms of insurance claims escalated into one of the biggest claims the country will ever see.

FAnews spoke to Origin Financial, a brokerage from the Western Cape to discuss some of the key lessons learned from the Knysna Fires.

What were some of the key lessons learned from the Knysna fires?
“The devastation of the Knysna fires made the broker community realise a number of very crucial things,” said Marius Bezuidenhout, Director at Origin, “It made brokers realise that clients are very dependent on the accuracy of advice from their broker. It further became clear that it is sometimes necessary for good brokers to insist on their clients selecting the correct cover, which is not always the cheapest option. Finally, it is scary to realise that a claim may present itself in a blink of an eye, and very seldom in the way that one may ever imagine.”

"The Knysna fires have really brought home the awareness of risk management and proper advice by brokers," said Tim Timmerman, Insurance Portfolio Manager at Origin. "CEO of Bryte, Edwin O'Neill came to George with feedback of the claims. They estimate that 30% to 40% of the clients are underinsured. I assisted a Loss Adjustor on some claims and saw the difficulty in explaining to a client that he would not get the actual replacement value for his home and content. As a broker, it is thus important to give your client the most accurate advice on how their home and contents should be insured.”

Once the fires started, what was the role of the broker?
“We have found that brokers reacted differently to the fires in respect of the roles that they played,” said Bezuidenhout, “One of our directors made the effort to visit the area along with some of our brokers. They provided assistance to a large number of our clients, but also to other victims by just being there, offering real-time assistance, and being the face of hope.”

“This gave us the opportunity and privilege to be part of a community drive to manage the crisis and to provide assistance. For once we had the opportunity to model a very compassionate side to our clients, through the face of our friends on the ground, and to show them that risk management is not only about selling insurance, but also to care for our own, and demonstrating our commitment to our clients,” said Bezuidenhout.

How does an event like this show the value of insurance and how a disaster highlights the importance of risk management?
“People need to realise that they need to focus on risk management, not only on insurance,” said Bezuidenhout. “Insurance only forms a part of effective risk management. Choose an insurer and a broker who understands the difference between insurance, and risk management. The difference became very clear during these last events, and people would want to rethink their risk management position going forward.”

“I agree; the importance of risk management and good advice was definitely thrust into the spotlight and those clients who had adequate policies that responded will forever remember this aspect. Tragedies such as this either draw people together or force them apart,” said Timmerman.

What role does the broker play in rebuilding after the fires are gone?
“The main point is to keep an eye on making sure that relationships across the value chain (client/insurer/contractors/suppliers) are maintained and kept as smooth as possible until you have complete replacement or reinstatement of the client’s property. It is also critical to help with the risk management review not only on making sure that correct advise is given on the new property, but also to help and guide clients on methods and give practical solution to mitigate and manage their risk in reducing or removing potential future catastrophic reoccurrences,” said Bezuidenhout.

The role of the broker can never be underestimated, or understated.