The South African Special Risk Insurance Association (SASRIA) says it cannot afford to cover the country’s businesses should it see a repeat of the July 2021 riots in the coming years.
Sasria is a state-managed entity that provides cover for riots and other damage caused by civil violence. In a presentation to the National Council of Provinces on Tuesday (26 April), the group said that the riots in KwaZulu-Natal and parts of Gauteng saw it payout over R37 billion in damage claims.
It added that there was no reinsurance capacity globally to cover another R37 billion loss event and that early warning signals point to another loss if interventions are not urgently put in place.
Sasria added that major retail groups such as Shoprite, Pick n Pay, and the Foschini Group could pull disinvest from the South African economy if this cover is not provided. Sasria is currently restricting all of its clients – including these major retailers – to a maximum cover of R500 million, which is ‘clearly not adequate’.
The group noted that reinsurer Lloyd’s of London had hiked premiums by as much as ten times in the last year as it is of the view that similar riots could reoccur in the country in the future.
South Africa saw its worst riots since the end of apartheid in July 2021, with the violence claiming 354 lives. The perceived lack of response from the government led to a cabinet reshuffle and the axing of the national police commissioner. The government also plans to enroll 12,000 police officers before the end of this year as part of efforts to rebuild its police force.
President Cyril Ramaphosa claimed it is abundantly clear that the last week of unrest and looting was instigated and formed part of an insurrection attempt to overthrow the current government.
“We must acknowledge that we were poorly prepared for an orchestrated campaign of public violence, destruction, and sabotage of this nature,” the president said at the time.
“While we commend the brave actions of our security forces on the ground, we must admit we did not have the capabilities and plans in place as this happened to respond swiftly and decisively.”