South Africa’s state-owned insurer, Sasria, says it has paid around R5.8 billion (USD 386 million) of claims two months on from the unprecedented civil unrest and rioting in the country.
The insurer also acknowledged there are “valid” concerns about its ability to honour claims, following warnings that the eventual bill could be as high as USD 1.34 billion.
In light of these concerns, Sasria says it has made important business interventions, namely capital and reinsurance restructure, and South African Government, as the sole shareholder, has committed to stand in as the entity’s insurer of last resort.
So far, the National Treasury has indicated that R3.9 billion will be disbursed to Sasria to help it meet claims obligation for this financial year, with further support dependent on what the finalised claims total looks like.
Despite some uncertainty over the level of government support, Sasria assured that it has sufficient reserves including through its reinsurers to meet all valid claims, and remains liquid and able to trade as usual while the additional support is being finalised.
Reporting on the progress of the claims process following the riots, Sasria noted that almost 100% of claims notifications have been received and are in the process of loss adjustment.
The company has committed to settling 80% of all claims between R1 million and R30 million by the end of October, and has also started paying interim payments on all claims above R30 million, with the goal of paying at least 30% of total claim value for these larger claims in the next couple of weeks.
Additionally, Sasria has engaged with industry partners and reached an agreement that the damaged properties will rather be rebuilt, than do cash in lieu payments.
“Our discussions with National Treasury are in line with the desired determination of the best medium that can inject capital, as we look at how to be future-proof ready and acknowledge the lessons learnt during the unfortunate unrest in July,” said Cedric Masondo, Sasria’s Managing Director.
“Sasria continues to play a key role in the insurance industry,” he added. “We urge clients to continue and maintain their policies with Sasria and would like to assure them of our determined resilience to maintain our excellent relations.”
Unrest began in South Africa on July 8th after former President Jacob Zuma was jailed for contempt of court, triggering riots and looting within Zuma’s home province of KwaZulu-Natal.
In the following days, the crisis spread out to other regions, including Johannesburg and surrounding areas in the Gauteng province, prompting the government to deploy 25,000 troops.
Costs have mostly centre around the extensive damage to malls and shopping centres, as well as hundreds of millions in stolen goods.
