Insurer blames cops

The South African Special Risks Insurance Association (Sasria) has seemingly laid the blame for its historical financial loss as a result of the 2021 July unrest at the door of the South African Police Service (Saps).

Two weeks ago, Sasria informed parliament’s select committee on finance that it is projected to suffer a loss of about R27.8 billion in the 2021-22 financial year, compared to a profit of R2 billion in the previous year.

This is despite more than R20 billion as a capital injection from the National Treasury.

Briefing the standing committee on appropriations yesterday morning, Sasria’s new chief executive Mpumelelo Tyikwe said that the non-life insurance company’s solvency capital ratio – currently at 68% – went down significantly because of the unrest and claims from businesses that were affected.

Tyikwe said this was Sasria’s greatest loss since the company was created in 1979.

“It is now commonly known that Sasria experienced the biggest loss in its history,” he said.

“With this biggest loss that we have had in our trading history, Sasria’s solvency dropped way below the 100% that is required by the Prudential Authority necessitating its sole shareholder, which is the state through Treasury, to inject a capital amount of R22 billion,” he added.

He said Sasria would not need the capital injection from the government if Saps had responded earlier to the riots.

“So if the unrest was stopped within three days of them starting, we could have avoided the claims that followed thereafter. If that was the case, Sasria would have been able to maintain its solvency and wouldn’t require a capital injection,” he said.

Responding to questions in the briefing, Tyikwe said Sasria was “designed to handle events of up to R17 billion”.

“In the past 42 years, we have been able to respond to civil unrest and we haven’t come to parliament to ask for assistance.

“What made this event unique was that the unrest played out over a period of time and as the time went longer, losses became bigger.

“That we did not anticipate and don’t think anyone for that matter anticipated it.

“If the event was R17 billion, Sasria would have been able to comfortably handle it.”

President Cyril Ramaphosa in February authorised the release of the 154-report into the July 2021 riots.

In the key findings of the report, a panel of experts concluded the police’s response was ineffective.

The experts said the police had insufficient capacity to curb the violence and the size of the crowds made it impossible to stop the looting that took place in KwaZulu-Natal, as well as in Gauteng.

“The police failed to stop the rioting and looting in July 2021. The reasons for this failure are complex and sometimes not of their making. In some instances, they did not get any intelligence upon which to plan operations,” the report reads.

The 8 to 19 July riots resulted in more than 330 people losing their lives and cost R25 billion in damages.

Meanwhile, Tyikwe said the capital injection will help Sasria cover claims of about R37 billion arising from the violent riots.

“The funding will be used to pay the claims that have arisen, which the last time we looked, were close to R37 billion. The second thing the [funds] will be used for is to recapitalise Sasria so that we meet our solvency capital requirements,” he said.

Tykiwe has indicated that Sasria expect to increase its premium by 38%.

It is commonly known Sasria experienced the biggest loss in its history