South Africa’s state-owned insurer, Sasria, has informed its clients that it will not cover civil unrest claims related to a potential total collapse of the national electricity grid.
The move, as reported by Business Day, follows pressure from the reinsurance market, which has previously urged Sasria to “eliminate [its] coverage for claims stemming from electricity grid failure as a result of the unprecedented levels of load-shedding”.
It also comes as South Africa is experiencing some of its worst load-shedding bouts, and ahead of the winter period when energy demand is expected to increase.
Load shedding is a way to distribute demand for electrical power across multiple power sources, and is used to relieve stress on a primary energy source when demand for electricity is greater than the primary power source can supply.
Sasria, which provides cover for strikes, riots and other forms of civil unrest, says that from June 1 all its existing and new policies will exclude cover for electricity grid failure.
In a circular dated April 28th, the insurer informed clients that going forward policies “will not indemnify you for any loss, damage, cost or expense, directly or indirectly caused by, arising out of, in any way or to any extent contributed to by, or in connection with electricity grid failure.”
“This exclusion applies to any riot, strike or public disorder (including civil commotion, labour disturbances or lockouts) directly or indirectly caused by, arising out of, in any way or to any extent contributed to by, or in connection with electricity grid failure,” it added.
Sasria had to rely on government aid after rioting in 2021 led to widespread theft and damage to property. The company’s reinsurance partners, including those at Lloyd’s, have since raised rates and expressed concern about a potential repeat scenario.
