Sasria, the only insurer in SA that provides cover against risks such as civil commotion, public disorder, strikes, riots and terrorism, says it is sufficiently capitalised and has three times the required minimum needed to settle claims related to the unrest sweeping across large swathes of the country.
The state-owned insurer provides non-mandatory cover for damages caused by civil unrest or public violence up to a maximum amount of R500m per policyholder, with clients typically opting for the level of Sasria cover they require as an optional extra when taking out private insurance policies.
Fareedah Benjamin, Sasria’s executive for insurance operations, says the company insures about 85% of all commercial properties and government buildings in SA and 100% of all privately mortgaged properties. Sasria also provides cover for unrest-related risk events for 100% of insured vehicles in SA, both private and commercial, though Benjamin says only about 30% of privately owned vehicles in the country are insured.
“Sasria has three times the required minimum [in terms of holding reserves for claims] and we are confident we are able to meet our financial obligations to settle claims,” Benjamin told Business Day in an interview.
“That’s also backed up by an international panel of reinsurance companies that are all A-rated to facilitate claims above the limits that we hold for. We are capitalised well, we have the reinsurance in place, we are able to facilitate the claims coming our way from our insured clients.”
With SA facing widespread looting on a scale never before seen in the wake of former president Jacob Zuma’s imprisonment for contempt of court, insurers are facing damages claims that could potentially run into hundreds of billions of rand. Even after President Cyril Ramaphosa deployed the army on Monday night to quell the violence, looting continued on Tuesday with KwaZulu-Natal and Gauteng worst affected.
But while Sasria has said it has sufficient capital to cover expected claims, it declined to provide a rand-value for the threshold it is required to hold, which is known as the solvency capital requirement (SCR) and is set at by the Prudential Authority.
The SCR is the total amount of funds that insurance and reinsurance companies are required to hold by the regulator, and covers existing business as well as new business expected over the next 12 months. While Sasria’s 2020 integrated annual report does not disclose an actual SCR figure, it does state that the company aims to hold adequate capital to withstand a 1-in-200-year stress event.
Sasria’s 2020 integrated annual report shows that its total financial and insurance assets totalled R8.756bn, which included just more than R4.25bn in cash, as well as various other financial assets with maturities ranging from three months to three years.
Benjamin said she could not reliably estimate what the total value of claims might be in the wake of the unrest sweeping across SA, but said it may not be as severe as one might expect.
“Even though it looks horrid, it might not be as bad as what is portrayed in the videos we see,” she said.
Citing the example of about 50 trucks that were set on fire at the Mooiriver Toll Plaza a few years ago, Benjamin said the total damages claim amounted to less than R300m including the goods being transported.
Nevertheless, one issue that may prove contentious in the ensuing claims battle will be that Sasria does not cover theft for normal burglary but only for theft that is a direct result of risk-events it covers, such as civil unrest, riots, strikes and terrorism.
“In terms of what’s going on at the moment we’re not disputing that it’s an act of Sasria peril that is happening,” said Benjamin. “But in terms of enabling us to indemnify a client, it is dependent on what we have from loss adjusters and assessors [following] the claims process.”
Sasria requires that claims are first lodged with client’s private insurers to determine whether the event is covered by the state-owned insurer.
“This is a red flag moment for clients to review their cover and make sure they are adequately covered,” said Benjamin.
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