FSCA, non-life insurers still confident Sasria will cover riot claims

Johannesburg - The Financial Sector Conduct Authority (FSCA) has issued a statement noting its concerns of the civil unrest, riots and looting that have been happening in various parts of the country over the last few weeks. The regulator stated that “in response to these events, the FSCA has been in discussions with Sasria Soc Limited (Sasria), the only non-life insurer that provides special risk cover in South Africa for risks such as civil commotion, public disorder, strikes, riots and terrorism.

The FSCA stated that in its discussions with Sasria, it received confirmation from Sasria that it will settle claims where the relevant cover is in place. The riots, whose majority had been propelled by the “FreeZuma” campaigners is in the main believed to be politically motivated, with a few other sporadic and isolated cases which may be pure, and brazen criminality. 

The riots which left over 200 people dead within a week and a trail of untold damage largely expected to be between R10bn and R25bn will no doubt deal a heavy blow to the financial standing of the only non-insurer that pays for such politically motivated riots that lead to damage to property, the state-owned Sasria (SOC) Ltd. Mr Cedric Masondo, Sasria Managing Director has been upbeat in the last few days assuring South Africa and the world in general that everything was under control, and Sasria will do everything to ensure that all valid claims are paid.

The soft-spoken Masondo is in a highly demanding position where the entire South African business fraternity that has been impacted by the riots, government - which also happens to be its shareholder - as well as peer non-life insurance companies are looking in his direction for comfort and solutions. Most non-life insurance companies act as Sasria agents collecting a certain percentage of monthly premiums from policyholders and handing them over to Sasria. The state-owned insurer has reiterated that it is well-capitalised with layers of A-rated reinsurance programmes and will be able to facilitate the payment of these policies. The industry has said that it was still open for new business, contrary to rumours that non-life insurers were shutting their doors to new business following the riots that have ravaged KwaZulu Natal and Gauteng business.

In the last few days, there have been numerous estimates doing rounds about the estimated quantum of damage. The South African Property Owners Association (SAPOA), has estimated that about 161 malls were damaged, including 11 warehouses, 8 factories and 161 liquor outlets. The association says that approximately 200 shopping centres were looted and damaged, 300 bank and post office branches or outlets vandalised, and 1400 ATMs were damaged. More than 90 certain chain store pharmacies were destroyed beyond revival, with 150 000 jobs on the line. The estimated impact on the national GDP is R50bn.

On 19 July, OUTsurance's Chief Executive Officer, Mr Danie Matthee also expressed OUTsurance's commitment to assist Sasria in the processing of the claims stating that “beyond our partnership with Sasria in the claims space, we look forward to helping out where we can to help rebuild SA. This is another moment in our history as a nation where we can come together and show the world what it really means to be South African”.

Late last week, the South African Insurance Association, Ms Viviene Pearson, also expressed her confidence in the ability of Sasria to meet the claims juxtaposed with the riots. The amount of positivity coming out of the non-life insurance industry regards Sasria's ability to cover these claims is a vote of confidence in Mr Masondo and his team at Sasria, in the face of doubts emanating from other spheres of business. Doubts, even though they have quickly been allayed in some quarters, stem from the company's capitalisation which some say it is not enough. Some have even gone on to warn that businesses seeking to recover losses need to act quickly in filing claims to Sasria. However, SAIA says the industry was still busy trying to ascertain the amount of damage, and this is normally done through appointed loss adjusting firms, whose safety is also extremely important. 

SAIA and the FSCA therefore both urge affected policyholders to submit their claims directly to their insurer or financial intermediary or broker, who will then engage with Sasria on the specific claims on their behalf. The extent of the damage suffered by business owners has not been ascertained as this is a moving target for now.