SA’s short-term insurers are battening down the hatches amid ongoing unrest sweeping the country, with most saying they are referring claims stemming from the crisis to the SA Special Risks Insurance Association (Sasria), the state-owned insurer set up to provide cover for riots, strikes and acts of public disorder.
While it is still too soon to estimate the monetary value of insurance claims that will inevitably flood in once the unrest subsides, claims are likely to be substantial given the industrial scale of looting and damage to property. Durban and Johannesburg have been particularly affected, with the N3 highway between the cities, which transports a substantial portion of SA’s goods and fuel trade, largely closed off to traffic.
Old Mutual Insure has established a dedicated team to assist clients with unrest-related claims while Santam and Momentum Insure said they were helping clients direct claims to Sasria. Short-term insurers do not settle claims on behalf of Sasria but act as non-mandated intermediaries who must first determine whether the risk event being claimed for falls within the state-insurer’s mandate.
“We have negotiated with Sasria to appoint loss adjusters for claim amounts of up to R1m in order speed up the assessment process,” Old Mutual Insure spokesperson Christelle Colman told Business Day. “For claims exceeding R1m, we will facilitate the appointment of loss adjusters with Sasria. The cost of damages resulting from the unrest action is yet to be determined, given that the situation is still unfolding.”
Sasria’s cover is provided on an optional basis when private insurance clients take out policies. Clients select the level of unrest-related risk cover they require from Sasria in exchange for an add-on to their premium, with cover provided up to a maximum of R500m per policyholder.
Sasria, however, does not cover theft unless it is directly related to public disorder, meaning clients who suffer losses during the current looting wave may have to prove that losses were not due to typical burglary. Fareedah Benjamin, Sasria’s executive for insurance operations, told Business Day on Tuesday the insurer will have to rely on feedback from loss adjusters and assessors before settling claims though she did say the company is not currently refusing claims on the basis that they are not unrest-related.
Santam, the largest short-term insurer in SA, said it has so far registered 18 motor and 57 non-motor claims for so-called Sasria perils.
“At this stage we are unable to provide a monetary amount for these claims as the loss adjusters must still determine the extent of the loss for each claim,” Santam said in an e-mailed response to questions.
Hollard told Business Day it was not in a position to quantify its exposure or the likely value that would be covered by Sasria, saying only that the situation was dynamic with “new developments being reported continuously”.
Momentum Insure said it was logging client claims and referring relevant ones to Sasria.
“Claims stemming from the recent activities in KwaZulu-Natal, Gauteng and some other areas will fall within the ambit of cover and can be submitted to the Momentum Insure claims team, who will in turn facilitate the submission between clients and Sasria,” said Brand Pretorius, CEO of Momentum Insure.
Meanwhile, the SA Insurance Association (SAIA) urged businesses, motorists and the public to exercise “extreme vigilance” during the unrest which it said could linger for some time. The National African Federated Chamber of Commerce and Industry (Nafcoc) condemned the unrest saying black-owned businesses in particular could not afford the turmoil.
“The longer it takes to restore calm, the more the economic and human costs of the present instability in SA will inevitably rise. The economy is already grappling with a level 4 lockdown. The latest cycle of violence must be contained sooner rather than later to avoid further economic jeopardy” NWU Business School’s Raymond Parsons said.
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