Claims soar to R32bn for the ‘world’s most expensive riots’ in July

Sasria MD Cedric Masondo on July 12 estimated claims arising from the riots and looting in KwaZulu-Natal and Gauteng would be in the region of R5bn, but on Monday he said that figure turned out to be R32bn, making it the world’s most expensive riots.

“If you add claims settled by other insurance companies in excess of Sasria limits, and the losses of those who had no insurance, losses from the events of July 9 to 19 this year amount to about R50bn,” said Masondo.

“That’s just the loss of property, stock, trucks and the like. We don’t know the extent of the economic losses.”

Sasria, the SA Special Risk Insurance Association, is the state-owned civil commotion insurer, covering businesses and citizens against losses from rioting, strike action and public disorder.

Relatively modest Sasria premiums are paid to insurance companies as an addition to traditional cover, with the insurers acting as agents for Sasria in processing claims.

Previously, the most claims Sasria had received were slightly less than 6,000 for the entire 2018/19 financial year.

However, claims relating to the 11 days of “commotion” in KwaZulu-Natal and Gauteng generated more than double that at 14,051.

Masondo was speaking to the media at a virtual progress update briefing after last week's announcement that Treasury would give Sasria another R11bn towards settling the claims, on top of the R3.9bn it “injected” in October.

“On July 9 we thought it was another one of those riots that would die down after a few days,” Masondo said.

“We never thought that by Monday the torching of trucks at Mooi River would end up being the most expensive riots in the world, bigger than the riots claims in Chile and those in the US.”

Of those 14,051 July unrest-related claims amounting to R32bn — some encompassing losses from multiple stores — Sasria had paid out R12.6bn by Monday.

Its target is to settle all claims of up to R2m by the end of December, and claims of up to R60m by the end of March.

The biggest claims, involving the destruction of buildings, will take up to 18 months to be paid.

About 80% of all claims came from KwaZulu-Natal and the remaining 20% from Gauteng.

Is Sasria expecting a repeat of those 11 days?

“We expect riots,” Masondo said, “but within our financial capability.”

“We are watching with interest the commissions and inquiries taking place to try to understand why it happened and if it will happen again, but we are comfortable we will come out of this crisis.”

Sasria has had to increase its reinsurance capacity at a time when the mostly London-based reinsurers have a much-reduced risk appetite, thanks to the events of July.

That has come at a cost which will reflect in the traditional rates increase of February 2022.

“This will put us back in a healthy financial position, well capitalised and able to maintain liquidity, pay all valid claims and continue to operate in the future,” Masondo said.

A particular focus for Sasria is reaching small business owners, many of them in townships, who did not have Sasria cover.

“We are working on making sure they are covered,” Masondo said.

He apologised for delays in settling claims, explaining that the organisation initially didn’t have enough claims handlers and loss adjusters to deal with the influx of claims,  and huge ones at that.

Sasria’s operations manager Fareedah Benjamin said the organisation was forced to employ more staff to deal with the claims, and is still increasing its staff complement.

Claims handling has also been hampered by clients having lost crucial documentation needed to submit claims, loss adjusters not being able to access properties, and the inflating of claims by some.

“We look for every reason to pay a claim unless there is a material reason not to,” Benjamin said.

“Less than 1%, or 130 claims, have been rejected,” she said, “mainly either because they did not have Sasria cover in place or because they hadn’t paid their premiums.”

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