The unrest that occurred in the Gauteng and KwaZulu-Natal provinces in South Africa is one of the most expensive riots to have taken place on a global front in the past ten years. With many communities still reeling from the impact of the looting and plundering.
The looting and violence put more than 150,000 jobs on the line after 200 shopping centres and 3,000 stores were lotted and damaged, with 161 malls, 11 warehouses, and 8 factories left damaged.
The after-effect of the blitz riots
The South African Special Risk Insurance Association (Sasria), which is an entity of the National Treasury responsible for covering special risks consisting of terrorism, riots, and strikes, announced that claims of the unrest amount to between 20 billion ZAR and 25 billion ZAR.
The blitz riot cost more than riots spread across 20 United States last year following the incident in which George Floyd was killed by police in May 2020, which amounted to 21 billion ZAR.
For Sasria to pay the claims linked to the looting and unrest incidents while meeting capital requirements that have been outlined by the regulator, Sasria will need a capital injection from the government, through a special appropriation process that can only be approved by Parliament.
The 3.9 billion ZAR funds required will be allocated as “top-up” cover for any shortfalls that could occur when Sasria starts to pay out claims, with Parliament assured that it will not be used towards any other purposes, such as salaries.
If there are any unallocated funds from this, it will be dedicated to the Sasria Solvency Capital Requirement (SCR), so that 100% can be met. However, 3.9 billion ZAR may not be enough. As of September 3, there have been 2.8 billion ZAR in claims settled and apart from the capital injection required, Sasria is relying heavily on premium growth to restore financial soundness.