Public unrest, damage and Sasria – Claim if you can

South Africa has seen an unsettling degree of public unrest, looting and destruction in the last week or so. Many businesses in KwaZulu-Natal and Gauteng have been subjected to the brutality of the unrest and some have even seen their stores, warehouses and factories burnt to the ground.

These businesses will look to their insurers to cushion the financial blow caused by the public disturbances. The insurance sector will play a vital role in the recovery and rehabilitation of some of these commercial operations.

In considering next steps and contingency plans, businesses must consider all insurance coverage options, including the cover available through Sasria SOC Limited (Sasria).

What is Sasria?

Sasria, formerly known as the South African Special Risks Insurance Association (Association), is a State-owned short-term special risks insurer. It is a reinsurer of last resort and is the sole supplier of insurance cover for special risks in the country.

In the midst of the significant political upheaval that unfolded during the 1970’s during Apartheid South Africa, a gap was identified in the conventional insurance market. Short-term insurers were not prepared to underwrite and insure the risk(s) associated with damage caused by politically-motivated acts.

The State therefore approached the South African Insurance Association to persuade the private sector to provide cover for this special type of risk. The Association was consequently formed in 1979. In 1998, under the South African constitutional dispensation, the Association was converted into a public company owned entirely by the State.

The general public is not able to purchase insurance cover or claim directly from Sasria. Sasria operates through a network of insurers (Sasria agents), who must apply to be Sasria agents. Sasria cover and the claims process must be conducted and administered through the Sasria agents, who will collect a nominal premium. This structure is intended to limit the overhead costs of running Sasria.

What risk does Sasria cover?

In order to claim, it is imperative that businesses subscribe to the Sasria cover (as it is voluntary) through their insurers and consider the Sasria policy wording to ascertain whether they are able to lodge a claim for damages arising from the recent unrest, and to ensure that going forward, they have the appropriate contingency plans in place.

Sasria generally covers the following special risks (limited to property located within the borders and waters of South Africa):

• Any riot, strike or public disorder or any act or activity which is calculated or directed to bring about a riot, strike or public disorder;
• Any act calculated or directed to overthrow or influence any State or government (including any provincial, local or tribal authority) with force, or by means of fear, terrorism or violence;
• Any act which is calculated or directed to bring about loss or damage in order to further any political aim, objective or cause, or to bring about any social or economic change, or in protest action against any State or government (including any provincial, local or tribal authority) or for the purpose of inspiring fear in the public, or any section thereof;
• Any attempt to perform any of the above three acts;
• The act of any lawfully established authority in controlling, preventing, suppressing or in any other way, dealing with any of the aforementioned acts or attempted acts; and
• Looting committed as part of the aforementioned acts.

Sasria cover excludes various events, including certain risks associated with war, nuclear events and pandemics (like COVID-19). However, Sasria’s business interruption cover may be available in regard to the latter but is a stand-alone policy.

It is important to note that looting is not a standalone peril in terms of Sasria’s policy wording. A business only becomes eligible for Sasria cover for looting if the looting occurs during an active peril for which Sasria accepts liability, such as a riot or public disturbance. The Sasria policy wording describes “looting” as, “to steal goods, typically during a riot, strike or civil commotion. Looting must take place during an event that Sasria covers. Sasria does not cover theft”. Ordinary theft should be covered by short-term contents insurance.

The public unrest in South Africa came days after former President Jacob Zuma was sentenced to 15 months imprisonment for contempt of court and began serving his sentence at the Estcourt Correctional Centre in KwaZulu-Natal.

During President Cyril Ramaphosa’s address to the nation on 16 July 2021 concerning the public unrest, he referred to the looting, “mayhem” and “unprecedented violence and destruction” that unravelled over the prior several days. He specifically stated that, “these actions are intended to cripple the economy, cause social instability and severely weaken – or even dislodge – the democratic state” and that “using the pretext of a political grievance, those behind these acts have sought to provoke a popular insurrection”.

Much of the public unrest that unfolded recently, particularly in KwaZulu-Natal and Gauteng, may fall within the ambit of Sasria’s policy wording, particularly, under “riots”, “public disorder” and the related “looting”. As a result, there may be several meritorious claims that can be lodged with Sasria.

How to lodge a claim with Sasria

Sasria explains the steps to follow in order to register an insurance claim on its website. Generally, the process is as follows:

• Report the incident that caused damage to your business as a result of the unrest to your local South African Police Service (SAPS) station as soon as practically possible and obtain a reference/case number;
• Contact your insurer (Sasria agent), to notify it of the incident and loss. The insurer ought to guide you on whether the claim gives rise to a special risk claim that is to be lodged with Sasria. Be sure to collate and provide your insurer with sufficient information and details concerning the loss and the damage-causing event;
• If it is a special risk “Sasria-eligible” claim, your Sasria agent will lodge the claim with Sasria. Claims must be lodged within 30 days from the date of the insured event. The Sasria coupon number must be included in the claim;
• There ought not to be an excess payment due to Sasria at claims stage, save for certain exceptions. Your Sasria agent will deal with Sasria throughout the claims process;
• Sasria ought to revert to your Sasria agent within 24 hours of lodging the claim;
• Arrangements will be made for a Sasria assessor to visit the business premises and assess the damage; and
• The merits of the claim will be assessed by Sasria and a decision will be made to either accept or reject the claim. If accepted, Sasria could make a monetary payment to you as the insured or repair, replace or reinstate the damaged property.

Sasria stated in Communique 92, dated 13 July 2021, that they have agreed with Sasria agents that, in an effort to deal with claims effectively and efficiently, Sasria agents may settle claims relating to the recent unrest of up to ZAR50,000. In this context, Sasria agents may authorise payment directly to claimants and will later be reimbursed by Sasria. This will allow businesses with smaller claims to be assisted quickly and easily.

Sasria stated publicly that it will pay valid claims as a result of politically-motivated rioting and looting. Sasria’s managing director, Cedric Masondo, stated that, “Business owners who have Sasria cover and had their premises, equipment, vehicles and/or merchandise destroyed or looted as a direct result of the violent riots, can claim from Sasria”. Mr Masondo stated reassuringly that, “…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.”

In Communique 91 published on Sasria’s website, dated 12 July 2021, Sasria referred to the protest action that transpired most notably in KwaZulu-Natal and Gauteng, and assured the public that they are, “…well capitalised with capital adequacy of more than 3 (three) times, and in addition we have adequate reinsurance programmes…we are confident that we will be able to provide for the anticipated claims.”

While the sentiments expressed by Sasria surrounding the recent events are positive, it will still need to follow due process. It is therefore vital that all Sasria claims are diligently prepared and that the damages are sufficiently linked to the relevant loss-causing event described in the policy wording. All businesses should start or continue to gather the evidence that supports their claims.

Outright rejection of claims arising from the recent events by private short-term insurers (on the assumption that these are all Sasria claims) is not necessarily correct. Each claim must be assessed on its own facts and judged against the relevant policy. If claimants are able to prove that the damage was not caused by a Sasria peril like a “riot” but by an ordinary insured event, then businesses may well have valid claims against their private insurers and should take legal advice on whether to pursue same.

Any claimant who has any issues that are not satisfactorily resolved by Sasria, may be able to submit their queries or complaints to the Ombudsman for Short-Term Insurance, which we would be able to assist with, as well as any dispute that may arise during or after the claims process.

What action should be taken by businesses?

Businesses affected by the public unrest should check whether they have Sasria cover and if so, they should properly and timeously lodge a claim with Sasria through their insurer for loss(es) suffered. It is crucial that businesses act quickly in this regard and notify their insurer, in order for them to assess and lodge the claim with Sasria within the 30 day time period.

There is no guarantee that similar unrest will not reignite over the coming weeks and months. We therefore encourage businesses to ensure that their Sasria cover is intact, renewed and premium payments up to date. We also recommend that those who do not have Sasria cover to consider subscribing to it through their relevant insurer.