Let’s start by addressing the facts. On 14 March 2022, Sasria announced, in Circular no: 517, that their re-insurers have pulled support for their “Excess of Loss Cover”. This typically has allowed clients and customers to increase their base sum insured from R500 million, combined cover for their material damage, to R1 billion.
However, the re-insurers have pulled their support for this cover and, as a result, Sasria is left without a facility to insure customers who have more than R500 million sum insured on their combined material damage section.
This particularly affects large body corporates, business parks, large corporate clients (towers and skyscrapers), and transportation and freight forwarding customers, with a focus on warehouses and docks. (This list is not definitive, and naturally more customers can be included).
A large knock-on effect
South Africa has been deemed as medium to high risk for the re-occurrence of the July riots, based on a multi-faceted risk analysis of the socio-economic circumstances. This view is supported by international re-insurers and has a large knock-on effect within the insurance industry.
This, by far and large, should disturb you, as much as it worries me. The country is still trying to recover from the large-scale unemployment, energy crisis after energy crisis, widespread corruption, and poverty on a nationwide scale.
South Africa’s problems haven’t stopped, since the civil unrest was quelled and the tension is lingering in the air, needing only the right set of circumstances to provide a nationwide repeat of what happened. Costing the country billions of Dollars in damages, business owners their livelihood, and, for many people, incalculable loss of life.
Suitable replacements/solutions
Should we have a repeat of last year’s civil unrest, many companies would be in dire straights with the insurance shortfall scaling into hundreds of millions. The insurance industry was so ill-geared for this, that four months after the announcement from SASRIA, many insurers have still not found suitable replacements/solutions for this facility in the industry.
As risk professionals and financial advisers in the industry, it is our duty to advise, help mitigate risks and assist our clients in ensuring their insurance is adequate
Should your clients need a Riot Wrap, companies like Oak Tree Intermediaries and Emerald Risk Transfer are able to assist. The requirements are extensive – see below:
Rheinhardt Schnetler
Head of Insurance
VCIB Insurance Brokers
Photo: Rheinhardt Schnetler
SAIA
We requested comment from SAIA on this matter, and their response was “Sasria will be best placed to comment about this issue.”
Muzi Dladla Executive Manager: Stakeholder Management – Sasria
- What happens if there is another big event?
- SASRIA’s Solvency Position has improved, with the capital injection from National Treasury to handle 1 in 200 year event. Should another event take place and the various levels of defence (i.e policy and army) respond accordingly, SASRIA would be in a position to handle the losses.
- Is there an alternative solution?
- SASRIA is looking for an alternative solution to providing additional cover within the confines of available capital.
- Do people realise the implications?
- It does not yet appear that the perpetrators realise the economic impact of their actions, that is one of the biggest risks we are facing.
- What is your suggestion to brokers and clients on how to handle this conversation?
- Broker can play an important role in educating and providing awareness to the communities that get involved in such events.
FSCA
