The Role of insurance in disaster risk reduction and resilient rebuilding: a case study of the 2017 Knysna fires

Thesis (MA)--Stellenbosch University, 2025.

Dube, S. R. 2025. The Role of Insurance in Disaster Risk Reduction and Resilient Rebuilding: A Case Study of the 2017 Knysna Fires. Unpublished masters thesis. Stellenbosch: Stellenbosch University [online]. Available: https://scholar.sun.ac.za/items/b1f9f33c-8fec-4d71-bc79-0cc53f1f159b

ENGLISH ABSTRACT: The role of insurance in disaster risk reduction (DRR) is increasingly recognised as a critical factor in increasing resilience to disasters. Insurance, and insurance companies can play a critical role in reducing risk, both by stipulating risk reduction in their policies and assisting households to recover from disasters. This thesis examines the role of insurance in DRR and recovery, using the 2017 Knysna fires as a case study. These fires, among the most destructive in South Africa’s history, resulted in significant property damage, job losses, and economic disruption, raising important questions about the role of insurance in recovery and rebuilding efforts. The study explores several key aspects: the function of insurance in DRR, pre-fire insurance coverage levels in the affected areas, the extent to which insurance facilitated recovery, and the incorporation of risk reduction measures during rebuilding. The research employs a mixed-methods approach, combining interviews with homeowners, insurers, and local government officials with a review of insurance claims and policies related to the fires. The findings reveal that while insurance played a crucial role in enabling recovery for many households, it also holds the potential to promote broader resilience through 'building back better' (BBB). This potential, however, was limited by underinsurance, high premiums, and a lack of enforceable risk reduction (DRR) measures. In the aftermath of the fires, insurers faced significant challenges in balancing commercial priorities with the need for proactive disaster risk management. They were reluctant to require comprehensive risk-reduction measures for fear this could disincentivise coverage, highlighting tension between profit-driven models and the need for greater resilience in high-risk areas. However, the study also identifies opportunities for improving the synergies between insurance and DRR efforts. Collaborative initiatives between insurers show promise in enhancing risk awareness and promoting resilience. However, the broader challenge remains making insurance more accessible and affordable, particularly in vulnerable communities. Without addressing these systemic issues, the potential of insurance to contribute meaningfully to DRR will remain constrained. This thesis concludes by recommending a more integrated approach to DRR involving vital collaboration between insurers, local governments, and communities. Public-private partnerships, increased affordability of disaster-related insurance, and the adoption of national DRR policies that incentivise risk reduction are crucial to ensuring long-term resilience in areas like Knysna. The findings of this study contribute to the growing body of knowledge on the role of insurance in climate resilience and underscore the need for more proactive approaches to disaster risk management.

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Masters