The SA Special Risks Insurance Association (Sasria), the state-owned special risks insurer, plans to build its reserves wiped out by the 2021 riots to R30bn by 2029 and has given notice to its clients of a 25% weighted average increase in its premiums.
Sasria insures against acts of terrorism, labour and civil unrest and riots, events that private sector insurers are unwilling to cover. High levels of poverty and unemployment contribute to the risks it has to deal with.
CEO Mpumelelo Tyikwe briefed parliament’s finance committee on Wednesday on its performance and strategic plans.
Sasria faced claims of R32bn due to the July 2021 riots and the fiscus had to recapitalise the company to the amount of R22bn so that it could meet them as it only had R9.5bn in reserves at the time.
More than 350 people died in the riots, sparked by the imprisonment of former president Jacob Zuma for contempt of court. The cost to the economy was estimated at about R50bn.
Tyikwe said as the fiscus lacked the means to bail out the insurer again it wanted to build its own reserves.
At end-March it had reserves of just more than R17bn and any event amounting to more than R20bn would require assistance from the fiscus, Tyikwe said.
“We are on a better footing but we are not out of the woods yet,” he said.
Sasria aims to grow its reserves to R20.5bn in 2025/26, R22.9bn in 2026/27 and R25.7bn in 2027/28.
Preliminary results for 2024/25 showed that gross written premiums grew 8.79% to R5.7bn compared with R5.2bn in the previous year. This growth was above the industry average of 6%. Sasria aims to achieve 8% growth in gross written premiums over the next three years and investment returns of CPI plus 2.5%.
The company deals with about 3,200 claims each year. It has paid R15.5bn to the state in taxes and dividends over the years.
Uncertainty over instability associated with last year’s election outcome meant it was only able to get 45% of the reinsurance cover that it wanted but had been able to get 90% of the cover in this financial year.
As well as building up its reserves, Tyikwe said Sasria was considering providing additional cover of more than R500m for big corporates and was considering covering climate change risks with Land Bank.
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