The SA Special Risks Insurance Association (Sasria), the state-owned special risks insurer, has still not fully recovered from the R24.3bn loss it suffered in the 2021 riots, but its financial position strengthened last year.
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.
Members of parliament’s finance committee heard from Sasria CEO Mpumi Tyikwe during a presentation Friday that among the evolving risks were illegal mining; taxi-related violence; uncertainty over police leadership and the capacity of the police to deal with unrest, the availability of water and the maintenance of public infrastructure; the demands of unemployed youth for jobs; and the upcoming local government elections in 2026 and 2027.
Instability in the governments of national and provincial unity; labour unrest and demands for higher wages; the increase in the frequency and severity of extreme weather events that could lead to community protests and property damage; student protest such as took place recently at Fort Hare University, where buildings were damaged; and economic stagnation posed threats.
The geopolitical instability and protests taking place globally, including in Tanzania, Nepal, Madagascar and Bangladesh, also affected reinsurance premiums, Tyikwe said.
Sasria CFO Dirk Kunz said in a presentation on the company’s 2024/25 annual report that the insurer was still in a recovery phase. The profits since the 2021 riots, which resulted in 354 deaths, claims against Sasria of R35bn and the estimated loss to the economy of R50bn, had not yet offset the total loss incurred in the 2021/22 year.
The profit in 2022/23 was R3.8bn, in 2023/24 R2.8bn and in 2024/25 R4.5bn.
The state had to step in in 2021 with a R22bn bailout for Sasria to enable it to pay out the claims arising from the riots.
The 2024/25 year was a good one for Sasria, enabling it to strengthen its balance sheet and build up its reserves. This has put it in a position that it could cope with a catastrophe resulting in claims of R20bn. Tyikwe said, but anything over that amount would require state assistance. In March 2024 Sasria was in a position to cope with only a R10bn catastrophe.
Gross written premiums in 2024/25 increased to R5.9bn from the R5.4bn in 2023/24, gross claims amounted to R666m (R481m), the net reinsurance expense declined to R592m from R1.3bn, net investment income climbed by 26% to R1.3bn (R1bn) and profit for the year rose to R4.5bn from R3.3bn. Increases in premiums also contributed to the good performance.
The result was an increase in total assets to R21bn (R16.5bn) due to the growth in its own funds and increased reinsurance capacity. Sasria plans to build its reserves to R30bn by 2029.
The Sasria annual report noted that the company was investigating opportunities to expand its product offering to include climate-related risks.
Finance minister Enoch Godongwana noted in his foreword to the report that “as SA contends with the increasing frequency and severity of climate events, such as floods, droughts and other natural disasters, there is a clear and urgent need for innovative financial instruments to manage these risks.
“I welcome Sasria’s proactive engagement with the government, regulators and stakeholders in this regard, and I am confident that these efforts will lead to new and/or improved mechanisms to assist in protecting public and private assets in the face of environmental volatility.”
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