Power cuts: Insurers feel heat

2008-02-04 21:19

Cape Town - Power cuts in South African mines will have a negative impact on the global insurance industry, risk assessment company Alexander Forbes warned on Monday.

"If hundreds of South African mines were each to claim up to R250m for business interruption caused by power outages, the impact on the local and international insurance markets would be profound," Debbie Geraghty, Head of Risk Services at Alexander Forbes said in a statement.

Given that South African mining and industrial debt was re-insured globally, the potential sums called upon to cover South African power-related loss could cause a global re-insurance shock, Geraghty said.

"Either way, the cost of re-insuring South African risk going forward is likely to increase - driving up the cost of investing in South Africa.

"Global insurance concerns aside, the industrial impact of power shortages in South Africa poses further threats to the industrialised world," she said.

- SAPA