Treasury makes case for Sasria to get R3.9bn cash injection
THE SOUTH African Special Risk Insurance Association (Sasria) could receive a R3.9 billion cash injection to strengthen its balance sheet as it starts to pay business insurance claims emerging from the civil unrest in July.
This was revealed by the National Treasury yesterday as it asked Parliament to consider approving a second special appropriation bill.
Sasria had made submissions to Parliament last week on why it required the R3.9bn.
This is one bill that Finance Minister Enoch Godongwana would wish to be passed with speed as he prepares to table his maiden Medium-Term Budget at the end of October.
Sasria has so far authorised insurers to pay claims up to R1 million, while at the same time making interim payments for large claims.
This week, Insurance Claims Africa, a public loss adjuster, urged Sasria to urgently pay riot-related claimants at least 30 percent of their insured sum upfront, saying the delay in payment was causing companies cash-flow issues.
However, the state-owned insurer is still in the process of reaching the final quantum of claims which are estimated to reach at least R20bn.
Sasria has approached the National Treasury to assist with a shortfall in capital needed to meet the estimated claims.
By the end of August, Sasria had paid R2bn to settle all valid small and medium-sized claims in the next six weeks.
For one, the Clicks Group yesterday revealed that Sasria had made its first interim insurance payment of R217m for its total Sasria claim of R726m.
The Treasury's chief director of state-owned enterprises, Ravesh Rajlal, said Sasria sought additional funding of R3.9bn to fulfil its obligation and pay out claims to the affected businesses.
Rajlal said that, based on a preliminary assessment undertaken by Sasria on July 14, its estimation of the claims it would be liable for range between R10bn and R20bn.
“Sasria indicated that it would require an equity injection in the event of claims amounting to R15bn,” Rajlal said.
“A provision of R3.9bn additional funding has been included in the bill to provide for a required capital injection should Sasria exceed its limits,” he added.
The bill seeks urgent additional funding allocations of R32.85bn to five government departments in response to the impact of the Covid-19 pandemic and the civil unrest.
Other entities expected to benefit from the funding sought include the departments of Social Development, Defence, Police, and Trade, Industry and Competition.
The Treasury said a sum of R26.7bn was sought in line with President Cyril Ramaphosa's announcement to reintroduce the R350 social relief of distress grant until the end of March 2022.
It is estimated that 13.2 million people will be eligible to receive the special grant.
The bill includes the R10.1bn approved through the Public Finance Management Act and R16.68bn for the remaining months, from November 2021 to March 2022.
“The total allocation of R26.7bn will cater for people in distress and R500m for Sassa for system enhancements to improve application and payment processes, including the strengthened eligibility assessment system,” the Treasury said.