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Recovering From The Looting – The Role Of The Insurance Industry

With the recent civil unrest and looting that flared up across the country on Monday, 12 July 2021 and subsequent damages, the role and importance of The South African Special Risk Insurance Association (Sasria) and insurance in general, has been thrust firmly into the spotlight.

Sasria was formed back in 1979 and today is South Africa’s only non-life insurer that offers cover against losses and damages resulting from civil commotion, public disorder, strikes, riots and terrorism.

At present, according to various media reports, the damages to property and losses incurred due to the riots are estimated at R16 billion. This figure is expected to rise as more affected businesses come forward.

Questions have been asked as to the role of different stakeholders such as the policyholder, intermediary, private insurer and Sasria, both in terms of who will be covering the costs as well as the claims process to follow.

Which insurers will cover these riot and looting damages?

Sasria is the only insurer with a mandate to provide cover against civil commotion, public disorder, strikes, riots and terrorism. Any business interruption loss or damages because of the recently politically motivated looting and riots fall within the realm of Sasria.

It’s important to note that policyholders do not automatically have Sasria cover and should check if they are indeed paying for this type of cover on their insurance schedule.

In a recent statement noted on various online websites, Sasria MD Cedric Masondo assured the industry and its policyholders, saying, “We are not going to define what a ‘riot’ means and reject claims if it falls outside of the riot definition. From our point of view, these are all Sasria-related claims, and payments can be made within a week.

Can SASRIA afford to pay-out as a result of this incident?

On 12 July 2021, Sasria issued a communique advising that they are well capitalised with an adequacy ratio of more than 3 times and have adequate reinsurance programmes with “A” rated insurers. As such, Sasria are confident that they are well positioned to provide for the anticipated claims.

What is the role of the policyholder in the claims process?

Assuming that policyholders have Sasria cover in place and their premium payments are up to date:

  • Report the matter to SAPS and get a case number
  • Notify your broker as soon as possible – it must be within 30 days
  • Assist the broker with additional documentation that may be required.

What is the role of the broker in the claims process?

  • Sasria has requested that all claims stemming from this event are registered with the agent company, which is the insurance company. What this means is that brokers will need to capture the claim on their system, but their insurance partner will actually submit it to Sasria and engage with them.
  • It is very important that the broker proactively guides policyholders as to the type of documentation that they will need to submit to them, so the broker may then submit to the insurer, along with the claim. This includes: police case number, completed claim form, policy schedule, proof of Sasria premium paid, Sasria policy or coupon, proof of incident and quantum documents.
  • The broker must ensure that all documents are submitted to the insurer to avoid potential delays.

What is the role of the Insurer?

  • Firstly, the insurer needs to make sure that there is regular dialogue with their intermediary partners to ensure that there is alignment as to the requirements and role of each party in the claims process. For example, Sasria has been issuing regular communiques to insurers.
  • Once the broker has registered the claim (and provided the relevant documentation) with the insurer, the insurer will then register the claim with Sasria. This is as per the existing Sasria business model and assists them to manage the claims effectively and expediently.

What is the role of Sasria?

  • Assuming that Sasria have received a registered claim from the insurer, with all required documentation, their role is to then assess the claim.
  • For larger claims, Sasria may request the insurer to first contact them to confirm the appointed loss adjustor.
  • Valid claims would then be approved and paid out by Sasria

Does the broker and/or insurer have a Sasria claims mandate?

  • All Sasria agreements are between Sasria and the insurer, not between Sasria and an insurer’s intermediary.
  • Brokers do not have any Sasria claims mandate (must be through the insurer). In turn, the insurer is required to register all Sasria-related claims with Sasria.
  • However, for this particular event and to expedite payment to policyholders, Sasria have agreed that all agent companies (insurers) may settle claims up to R50 000. The insurer must still register the claim on their system and still register the claim with Sasria via the normal process.
  • Sasria have also noted that for all claims above R1 million, the confirmation of loss adjustors must first be confirmed by Sasria.

What impact will these recent events have on the Insurance Industry and Economy?

According to Sujeeth Bishoon, Chief Underwriting Officer at Constantia Insurance Company Limited: “Businesses with Sasria cover will be able to rebuild and recover. Unfortunately, businesses without Sasria cover, who are often smaller businesses, may never be able to rebuild. This is devastating to our economy and to people’s lives, as jobs have been lost.”

Bishoon continues: “These events hinder economic growth and will impact the disposable income of policyholders, which impacts the affordability of insurance. It may result in higher price competitiveness to retain policyholders, underinsurance, and also higher cancellation rates. We could see a shrinkage of the short-term insurance industry ‘premium pot’.”

How is Constantia supporting brokers and clients during this period?

According to Clive Jainarain, Head of Claims at Constantia Insurance Company Limited:

  • We have implemented and communicated an enhanced process to assist our partners with these Sasria claims
  • Our claims staff are also now ring-fencing a portion of their day to follow up with Sasria on registered claims, to ensure we are also able to provide feedback to our partners and policyholders on the status/process.
  • We have proactively communicated with our brokers, the information/requirements from Sasria so that they are aware of all the supporting documents that are required for us to register a claim – complete documentation helps expedite the process.

A message from Constantia to the Industry

Events like this highlight the role and importance of insurance as a key pillar of any economy, as without insurance it would be near impossible to rebuild.

According to Bishoon: “Brokers must reach out to impacted policyholders with empathy and ensure that they explain the process to be followed for Sasria claims and submit complete documentation to insurers to avoid unnecessary delays. Equally, brokers should check if any of their policyholders do not have Sasria cover and consider recommending this is added to policies, where appropriate.

“Also, insurers must ensure that they are communicating the Sasria requirements to their broker partners, promptly registering claims with Sasria and following up regularly with Sasria in order to enable the broker with feedback.

“We also ask that Sasria resource accordingly to keep insurers in the loop and process valid claims as quickly and efficiently as possible, to enable claimants to rebuild and recover as soon as possible,” says Bishoon.