Sasria, the only insurer in SA that provides cover against civil commotion, public disorder, strikes, riots and terrorism, now says it is too early to quantify the damages claims that will stem from the wave of unrest sweeping across parts 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 standard policy. Holders of private insurance policies can select the level of Sasria-risk cover they require on an optional basis by adding an additional levy onto their insurance premiums, with the additional amount varying according to the level of cover they require.
Speculation has been rife over exactly how much Sasria will be liable for from insurance claims that will inevitably arise from the unrest that erupted in the wake of former president Jacob Zuma’s imprisonment but which quickly morphed into an orgy of looting and violence across KwaZulu-Natal and Gauteng. After a week in which estimates for damages claims ranging from R3.5bn to R30bn have been bandied about in the media, Sasria issued a statement on Friday saying it was too soon to tell.
“We take note of the uncertainty around the quantification of the losses or damages that have resulted from the current unrest,” Sasria’s MD, Cedric Masondo, said in Friday's statement. “At this stage we do not know the full value of Sasria claims as a result of these riots as most claims have not been reported and most are still being investigated by the loss adjusters.”
Martin Kingston, vice-president of Business Unity SA (Busa), has openly questioned whether Sasria has the financial resources to settle claims stemming from the current wave of unrest, which his organisation estimates could reach R12bn. Reuters reported on July 14 that damages claims would likely be between R7bn and R10bn however other media reports cited Masondo as providing figures as low as R3.5bn. The SA Property Association (Sapoa), which represents about 90% of SA’s commercial property sector, estimated damages at more than R20bn.
However, in Friday’s statement Masondo appeared to backtrack on his earlier estimates.
“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,” he said.
Masondo said Sasria had never before in its 42-year history witnessed the scale of looting and public disorder currently occurring in SA. While that meant claims would take longer than normal to finalise, as violence was preventing assessors from travelling to certain hotspots, he said Sasria was working closely with other insurers to fast-track claims.
“We would like to assure our clients, partners, and stakeholders that our internal systems are ready, and have been curated to respond with the necessary agility when we are contacted,” he said.
Fareedah Benjamin, Sasria’s executive for insurance operations, told Business Day on July 13 that the state-owned insurer is sufficiently capitalised and has three times the required minimum needed to settle claims arising from the unrest. Nevertheless, Benjamin declined to disclose the rand-value of that required threshold, 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 and new business expected over the next 12 months. Sasria’s 2020 integrated annual report says the company aims to hold adequate capital to withstand a 1-in-200-year stress event. The annual report also shows its total financial and insurance assets were R8.756bn in 2020.
“Sasria management has started engaging the Treasury as well as the Prudential Authority about possible solutions should the worst-case scenario in terms of the value of the damages materialise,” said Masondo.
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