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SA’s riots insurer in spotlight after days of carnage

Sasria’s not disputing the merits of related claims, only watching for cases of fraud – Fareedah Benjamin.
Debris inside a supermarket following rioting in the Soweto district of Johannesburg, South Africa, on July 15. Image: Bloomberg
As calm begins to return to South Africa following days of violent riots that caused billions of rand in damage, questions are being asked about who will foot the bill.

While some claims will be assessed by heavyweight insurers such as Old Mutual Group and Santam, the bulk of the burden will fall to one company little known outside the country: Sasria Insurance.

Read:
Can Sasria honour claims of up to R30bn?
Sasria: A 40-year story of risk, reward and metamorphosis 

Sasria, a state-owned firm with R8.5 billion in assets under management, was founded shortly after the Soweto uprising of 1976, when at least 176 people died in demonstrations led by school children against the apartheid government. The frequency and scale of political protests that followed prompted private insurers to stop offering cover to vulnerable businesses, and Sasria was crated to fill the void.

This week’s anarchic looting and destruction of all manner of buildings in two key provinces has thrust the company back into the spotlight. Formal estimates of the scale of the damage have yet to be calculated, but executives at Business Unity South Africa said Thursday the number of affected firms may extend into the thousands.

“We are well capitalised and have adequate reinsurance in place that gives us the comfort that we can facilitate these claims,” Sasria’s executive manager for insurance operations, Fareedah Benjamin, said in an interview. The insurer has three times its regulatory minimum capital requirement, she said.

The violence has its origins in demonstrations against the arrest of former President Jacob Zuma, but those sensing an opportunity to enrich themselves transformed the demonstrations into a looting spree, the government has said. At least 117 of people have died and authorities have made almost 1 500 arrests to date.

Listed companies to have reported the extent of their exposure include foods maker Tiger Brands, which said it lost R150 million of stock, and clothes retailer Mr Price Group, which saw 109 stores entirely cleaned out and hundreds more closed. But the rampage also swept up countless smaller businesses, many in under privileged parts of the coastal city of Durban and Johannesburg, the economic hub.

“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,” Sasria said in a statement Friday.

Sasria is not disputing the merits of claims related to the riots, only watching out for cases of fraud, Benjamin said. The company has centralised all applications so its most experienced handlers are able to process them quickly.

Many people and companies with Sasria policies may not even realise it, as commercial firms often include it in their own cover. All insured individuals have it alongside about 90% of businesses, Benjamin said.

Santam is monitoring the situation and in touch with Sasria about claims, the company said in an emailed statement. Old Mutual has put special measures in place to expedite payments, it said.

The private property-and-casualty insurers may find they still have exposure even with the Sasria safety net, said Warwick Bam, head of research at Avior Capital Markets.

“Business interruption policies could be triggered due to supply-chain disruption, lost production and store closures due to the risk of looting and violence,” he said.

Sasria collected R2.4 billion in gross written premiums and paid out R991 million in claims last year. In addition to covering public unrest, Sasria is also exploring options for Covid-19 insurance as South Africa battles rising infections and disruptions to its vaccine program.

© 2021 Bloomberg L.P.

COMMENTS   16

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Likely outcome : government extends SASRIA cover to people and businesses that did not have SASRIA cover. Then they better make it compulsory or it’s end of SASRIA.

What i find amusing and not in the least ironic are the masses who targeted the businesses of minorities, yet these same masses are now jobless (not everyone looted, but everyone suffers)

Back to SASRIA..The very same people who looted and destroyed many businesses, are the same people who vote ANC

SASRIA, being Government owned, is now responsible to cover the costs of businesses belonging to minorities, who do not vote for them

Interesting state of affairs..I fear that Government aka SASRIA might not honour what they should honour

I hope they do..This isn’t a Covid grant for one race group only..

Incidentally, anyone know how far the R3 bill went for grants to the Leisure Industry ?

If the mass market insurers can’t do their job right, I don’t see how the state riot insurer will.

I have been with Santam for over 10 years. The two times that I have claimed have been problematic.

For my car, they wanted to write it off, forcing me to compromise on the repairs. In the end it turned out that their appointed towing company had damaged the car’s suspension at the back (discovered by the dealership) and additional repairs were required.

For my house, a geyser replacement required that their repairmen come back several times to complete work that they had not completed, and fix issues that they have caused. Two years later and I am still fighting with them to fix what they have messed up. There are piping problems that were not there before.

I am open to hearing of good insurance claim experiences from other insurers as I am looking to move.

I had very good experience with Momentum, the towing company and RenewIt.
They were quick and efficient.

Sparkie – it is like looking for a “good” loan shark.

You’re not dealing with a bad insurer, you’ve got a bad insurance broker.

Where is a good insurance broker?

I doubt one is allowed to name a company outright but there is a great company out there where you can use an app to switch your car from stationary to comprehensive insurance at the touch of a button.

Why can’t you name a company outright?

If they are bad, people must know.

If they are good, people must know too.

I had two significant claims in the last 16 years. Santam paid out within days. You need a new broker.

Why are Sasria’s comments always so vague ? Its regulatory minumum capital is largely irrelevant. ‘Assets under management’ ignore its liabilities, and were last reported at March 2020, today’s valuations may look a bit different. Nothing specific about the reinsurance. Is ‘facilitating’ a claim the same thing as meeting it ?

The citizens always end up paying the bills.

Maybe the Zulu king and chiefs can arrange a collection from the locals to help sasria? If they can’t help, the tax money spent on the Zulu King and Chiefs must be stopped immediately and channeled to rebuild businesses.

If you finally get 10 cents to the Rand you will be doing well.

???? You will always get 100 cents to the Rand !!!

I think SASRIA are grossly underestimating the size and number of the eventual claims. This is an event on a scale they’ve never experienced before.

End of comments.

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