The government has allocated a total of R22 billion to Sasria in the current financial year to enable it to settle claims and ensure it has sufficient capital to meet regulatory requirements, according to the 2022 Budget Review.
The R22bn allocation includes R3.9bn through the Second Special Appropriation Act of 2021, R11bn through the 2021 adjustments budget and R7.1bn allocated through section 16 of the Public Finance Management Act, which is used to respond to unforeseen and unavoidable circumstances, National Treasury said.
Treasury said Sasria has paid dividends to the government in all but two years since 1999/2000. These dividends, generated from its surpluses, amounted to R12.8bn.
“To strengthen its ability to respond to risks without relying on government, Sasria will increase premium prices, review reinsurance arrangements and explore ways to increase its client base,” the Review said.
Garth Napier, the managing director of Old Mutual Insure, said recapitalising Sasria and ensuring it is a stable entity was critical, because a repeat of the 2021 riots would devastate the economy and the insurance industry.
“Sasria will be in a very difficult financial position to honour claims on a similar scale to those experienced in 2021 without government’s support.”
In a statement this week, Sasria said claims from the unrest in July last year totalled R33.833bn, of which Sasria has so far paid out R17.19bn.
It said, as promised in November, 80% of all claims under R30 million have been settled.
Sasria intends to have paid R27bn of the R33bn by the end of March, if all claim processes are met.
“The remaining claims will be those which require the rebuilding of infrastructure, which take time.”
Sasria managing director Cedric Masondo said the insurer has learnt key lessons from the July unrest and has undertaken different scenarios that will future-proof against similar incidents.
