Disaster-hit short-term insurers get off lightly after Cape fires

Natural disasters have cost short-term insurance companies hundreds of millions of rands in recent years, but the fires in Cape Town are not expected to hit the industry as hard as the fire that razed more than 80 homes in St Francis Bay in the Eastern Cape in 2012.

Pierre Geyer, a Hollard Insurance executive, estimated that the entire insurance sector may incur between R30-million and R40-million in claims from the recent Cape fires. This is significantly lower than the R500-million for the St Francis Bay fire.

This is because the Cape fires, which took five days and R1-million a day to put out, did not affect high-end residential homes.

Hollard's exposure is estimated to be R9-million in claims, while Outsurance may be exposed to R3-million. Mutual & Federal said it was "hardly affected".

The fires reduced 5000ha of the Southern Peninsula to ashes and affected Noordhoek, Tokai and Hout Bay.

Cape Town's tourism sector is expected to suffer the most as nature reserves were significantly affected. Geyer said it would take them "years to recover".

Tintswalo Atlantic Lodge in Hout Bay has shut down until the end of the year. The lodge suffered severe damage, with about 60% to 80% of the hotel being burnt to the ground. It is moving guests that had made reservations to surrounding hotels of the same calibre.

"We are ensuring that our guests receive the same inclusions during their stay at the other hotels, and most of the hotels have been truly wonderful in honouring the same terms and conditions that we put forward to our guests," said Michelle du Plessis, head of Tintswalo Lodges. She declined to reveal the cost of the damage the lodge sustained.

At least 13 homes were affected, with three razed. The inferno claimed the life of "Bees" Marais, a pilot who died in a helicopter crash while dousing a fire at Cape Point. Some residents from old-age homes had to be treated for smoke inhalation.

Donald Kau, head of corporate affairs at Santam, said the group was assessing claims as they trickled in. So far, it has received 20 claims.

In the St Francis Bay fire, insured costs incurred by Santam were about R40-million while Mutual & Federal incurred R22-million.

Acts of nature, such as floods and wildfires, have had a disastrous effect on the insurance sector in recent years. In 2012 alone, the sector coughed up R2.5-billion after floods in the Eastern Cape, hailstorms in Gauteng and the St Francis Bay fire.

On the positive side, a telethon organised by Primedia Group's Cape Talk, Talk Radio 702 and KFM during the Cape fires drew pledges of R3.9-million to support firefighters.