- While some claims will be assessed by heavyweight insurers such as Old Mutual Group and Santam, the bulk of the burden will fall to state-owned Sasria.
- Sasria is not disputing the merits of claims related to the riots, only watching out for cases of fraud, the insurer says.
- Many people and companies with Sasria policies may not even realise they are covered.
As calm begins to return to South Africa following days of
violent riots that caused billions of rand in damage, questions are being asked
about who will foot the bill.
While some claims will be assessed by heavyweight insurers
such as Old Mutual Group and Santam, the bulk of the burden will fall to one
Sasria, a state-owned firm with R8.5 billion in assets under
management, was founded shortly after the Soweto uprising of 1976, when at
least 176 people died in demonstrations led by school children against the
apartheid government. The frequency and scale of political protests that
followed prompted private insurers to stop offering cover to vulnerable
businesses, and Sasria was created to fill the void.
Sasria is not disputing the merits of claims related to the
riots, only watching out for cases of fraud, Sasria’s executive manager for
insurance operations, Fareedah Benjamin, said in an interview.
Many people and companies with Sasria policies may not even
realise it, as commercial firms often include it in their own cover.
All insured individuals have it alongside about 90% of
businesses, Benjamin said.
The company has centralised all applications so its most
experienced handlers are able to process them quickly.
“We are well capitalised and have adequate reinsurance
in place that gives us the comfort that we can facilitate these claims,” Benjamin
The insurer has three times its regulatory minimum capital
requirement, she added.
This week’s anarchic looting and destruction of all manner
of buildings in two key provinces has thrust the company back into the
spotlight. Formal estimates of the scale of the damage have yet to be
calculated, but executives at Business Unity South Africa said Thursday the
number of affected firms may extend into the thousands.
Listed companies to have reported the extent of their
exposure include foods maker Tiger Brands, which said it lost R150 million of
stock, and clothes retailer Mr Price Group, which saw 109 stores entirely
cleaned out and hundreds more closed. But the rampage also swept up countless
smaller businesses, many in underprivileged parts of the coastal city of Durban
and Johannesburg, the economic hub.
The violence has its origins in demonstrations against the
arrest of former President Jacob Zuma, but those sensing an opportunity to
enrich themselves transformed the demonstrations into a looting spree, the
government has said. At least 117 of people have died and authorities have made
almost 1 500 arrests to date.
“We anticipate that in about two months’ time, we will
have a clearer picture once all claims have been reported and investigations
and quantification have been completed,” Sasria said in a statement on Friday.
Santam is monitoring the situation and in touch with Sasria
about claims, the company said in an emailed statement. Old Mutual has put
special measures in place to expedite payments, it said.
The private property-and-casualty insurers may find they
still have exposure even with the Sasria safety net, said Warwick Bam, head of
research at Avior Capital Markets.
“Business interruption policies could be triggered due
to supply-chain disruption, lost production and store closures due to the risk
of looting and violence,” he said.
Sasria collected R2.4 billion in gross written premiums and
paid out R991 million in claims last year. In addition to covering public
unrest, Sasria is also exploring options for Covid-19 insurance as South Africa
battles rising infections and disruptions to its vaccine programme.