A year since the KZN riots, have all insurance claims been paid?

Sasria CEO Mpumi Tyikwe reports 80% of claims have been settled, but that premiums have had to increase substantially, resulting in policy cancellations.


FIFI PETERS: I think most of us know by now that today marks a year since the July unrest that took place shortly after the arrest of the former president of South Africa, Mr Jacob Zuma. But it also marks a year since most of us heard of the name Sasria. We learned what it means – that we had a state-owned insurance company that insures for special kinds of risks like political and riot risks. So Sasria really had its job cut out for it to try and patch up and make payments towards the damage that had been done from the riots – around R50 billion or so and perhaps counting.

Sasria itself received claims totalling around R38 billion from businesses whose stores had been looted and damaged by rioters. For an update on how things have been going this past year, particularly in terms of making payments, I’m joined by Sasria CEO Mpumi Tyikwe. Mpumi, thanks so much for your time, sir.

How are payments going? In terms of the claims has everything been paid by now, a year later?

MPUMI TYIKWE: Thank you, Sis Fifi, and good evening to you and good evening to your listeners. Yes. I can say that we have paid 80% of the claims that materialised from the July event as we speak today. For those that are still outstanding we do have the financial resources to pay them fully. However, it’s now [those] clients where we are waiting for various documentation from them to substantiate their claims, to make sure that we pay them.

There is a small percentage of claims where the clients are rebuilding their properties and we pay them during the various phases of their build.

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FIFI PETERS: So the 20% that’s outstanding – are these mainly small businesses, you’d say? Also some big businesses or a combination of the two?

MPUMI TYIKWE: It’s a combination of the two. Just like in an exercise of this nature what we’ve found is that if you count the number of claims, 89% of our claims were [from] small businesses. But in terms of amount, though, they were not that big.

The biggest were your bigger mall owners, property owners and retail stores. That’s where we received the biggest claims. And those claims have largely been paid, except for three that are in the process of being paid.

FIFI PETERS: Who are the three?

MPUMI TYIKWE: Well, to respect the client confidentiality I don’t think it’s fair to mention them. They are listed companies and we are waiting, for instance, for their financial statements to be finalised, and for them to substantiate their claims in full. We just need to agree on the amount and then we’ll pay them.

FIFI PETERS: All right. But in terms of the small businesses that are also potentially awaiting payment of their claims because of documentation that is not a hundred percent up to scratch, where are the gaps in that documentation? What haven’t they done correctly?

MPUMI TYIKWE: This is the strangest part which we battle as Sasria to understand. We have reached out to small businesses. But maybe, Fifi, let me just rewind a little.

When this event happened, we decided to outsource the small claims to our 61 agent insurers. When someone buys a Sasria policy, it’s normally embedded into your normal insurance policy. So we asked the 61 companies [and] of those about 35 took up the offer to handle claims on our behalf. Those claims, 95% of them, have been finalised.

The outstanding ones – where I’m battling to understand is [that] we would say to a customer, okay, we understand some of your records could have been destroyed during the fire, or during the meeting… or whatever the circumstances are. Please provide us with your last [financial] submission to Sars, and we will use it as a basis for settling.

Read:
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Or alternatively, if you are a franchise from, let’s say, one of the chicken outlets or one of the retail outlets, we’ll say, all right, give us your submission to your franchise holder, and then we’ll use that as a basis for settlement. And we are not making a breakthrough. But we have given those clients terms to say, please do submit your claim, because do have the money to pay you and we are ready to pay you.

FIFI PETERS: Are these businesses still operational, do you think – particularly the small ones that are still waiting on payment?

MPUMI TYIKWE: Look, it’s more the big ones where it’s been a challenge in getting them to operate, because you can appreciate that they’ve got bigger outlets which need to be reconstructed and rebuilt. For instance, we’ve got one client of South Korean origin who decided to disinvest in South Africa.

FIFI PETERS: Because of the riots?

MPUMI TYIKWE: Yes, because of the riots. I went to see their factory in KwaZulu-Natal: basically everything, everything was taken apart.

FIFI PETERS: Are you able to name that client?

MPUMI TYIKWE: [Laughing] It’s one of the TV manufacturers from South Korea. So you can guess which. But all that was left was just pillars to show where the building was originally.

Read: Can Sasria honour claims of up to R30bn?

FIFI PETERS: You’re speaking to the point of the cost of doing business in South Africa having increased, particularly from a risk point of view. I can confidently say I think that you believe so yourself, as Sasria, which is why you implemented an increase in your premiums. I believe this took place as of February 1 this year, where some packages went up by as much as 1 700%. You can correct me there if I’m wrong. But I’d like to understand the uptake in demand for Saria insurance that you’ve seen following the riots.

MPUMI TYIKWE: Look, what we are seeing three or four months down the line is that some clients have opted not to take Saria because it’s become unaffordable.

FIFI PETERS: How many?

MPUMI TYIKWE: The premium increases that you are referring to were mainly your heavy commercial vehicles, your logistics companies that move goods through South Africa. They’ve been going through a lot and we’ve experienced a high incidence of claims in that particular segment, especially those that use the N3 route to the Durban port.

We increased their premiums. I must say it’s off a low base, but we are starting to see now from our numbers that in terms of policy count, it has comes down as much as 30% of our… heavy commercial vehicles.

But because of the overall premium increase, you will see that Sasria – compared to where it was last year – finished March 2022 with R3.2 billion of premium income. By next year we’ll be sitting at R4.1 billion income, not because our number of clients has grown but because of the premium increase and those clients that remain with us.

FIFI PETERS: Assuming that those clients continue to remain and can afford [to] in this environment where things are going up.

Mpumi, I’d love to engage you further, but we are out of time. So thanks very much for your time this evening, I look forward to further discussions. Mpumi Tyikwe is the CEO of Sasria.

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When government incompetence and corruption makes a country uninsureable, it also makes it unbankable.

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