Mutual & Federal to lay off hundreds of workers

South African short-term insurer, Mutual & Federal says that it plans to cut its workforce by a fifth as claims surge.

Chief Executive Officer Keith Kennedy says that the company will make about 600 of its almost three thousand staff redundant by the end of the year. He added that the company will offer early retirement and retrenchment terms to staff.

Kennedy pointed out that the steps were still a proposal and that they were consulting with staff now. Staff costs account for about 65% of the company's total.

Insurance claims have climbed at Mutual & Federal and bigger rival Santam since 2005, as more fires and floods destroyed buildings. The cost of repairing vehicles has also risen as South Africans bought imported cars with more luxury features and the rand declined, boosting spare parts prices.