After already facing severe impacts because of the Covid-19 pandemic, South Africa faced new challenges and a hit to its economy during July, following unrest and looting in Gauteng and KwaZulu-Natal, costing businesses billions, and leading to claims worth over R6 billion, putting a significant amount of pressure on the South African Special Risk Insurance Association (SASRIA).
SASRIA has already received more than 13,000 claims from businesses in these provinces who were affected by the unrest and looting in July, following the arrest of Former President Jacob Zuma. During this period of violence, more than 300 people lost their lives while the property was damaged, and goods were stolen.
While there are businesses that are struggling, SASRIA has also received countless fraudulent claims. According to Cedric Masondo, SASRIA expected claims from everywhere in the country, but not to such a degree.
Deeper impact of the unrest and who should pay for the damages?
Some insured losses, for those who have insurance, could reach over 15 million ZAR, but the overall cost that the South African economy faces could be much more than this.
The economic disruption which was caused by the unrest and violence could easily take away R50 billion from the overall 2021 Gross Domestic Product (GDP), which could reduce the post-economic growth by as much as 0.7%.
South Africa’s insurance industry has a unique structure with strict regulatory controls where insurer insolvency is concerned, which means that there should be enough money for insurance to fulfil their obligations.
SASRIA provides businesses with cover on their gross profits, working expenses, standing charges, and net profit. Thus far, SASRIA has allocated R700-million for private insurers to pay claims less than R1 million, while it is still a process sorting out legitimate claims from those that are fraudulent.