By Karen Rimmer
Even as we celebrate 30 years of democracy and will soon be heading to the polls again, South Africa remains socially and economically challenged, with low economic growth, high unemployment and rampant inequality.
A knock-on impact of this is that the risk of strikes, riots and other forms of unrest unfortunately cannot be ignored.
Such risks are not covered by commercial insurers, but rather via the South African Special Risk Insurance Association (Sasria), which is a public enterprise listed under schedule 3B of the Public Finance Management Act No 1 of 1999.
Importantly, the cover offered by Sasria is not automatically included in your policy, but needs to be specifically added.
The riots and looting in parts of KwaZulu-Natal during 2021 cost the country billions of rands.
Much of this destruction was suffered by individuals whose homes were damaged, and businesses that reported large-scale stock losses and vandalism.
Similar examples of such destruction and losses have been seen in the Western Cape, where periodic unrest in the Cape Town city centre and in surrounding areas has caused damage to businesses.
Being insured against civil unrest is vital. Not only for individuals, but especially for businesses, as these tend to be more exposed to such risks – especially where looting is involved.
What’s covered and what’s not
Sasria currently provides insurance coverage for specialist risks that fall within the following categories: politically motivated malicious acts, riots, civil commotion, public disorder, strikes and acts of terrorism.
Sasria also offers an extension for security costs incurred to prevent imminent danger, should there be any riots, civil commotion or public disorder within a 10km radius that puts your property in danger.
Exclusions from this cover include any material or financial losses caused or contributed to by acts of terrorism that are nuclear, chemical or biological.
Sasria only covers assets up to a limit of R500 million and excludes any consequential or indirect loss or damage.
Who can apply for Sasria cover?
Both individuals and businesses can apply for Sasria cover, with most local insurers acting as agents of Sasria and offering their clients this cover as an extension of their existing insurance policy.
The experience of PSG Insure has been that businesses are relatively more vulnerable to losses relating to civil unrest, especially where looting or rioting is involved.
Without this cover, businesses are at risk of having to sustain severe financial losses and having to replace or repair their property and goods out of pocket.
Having this kind of pre-emptive safeguard in place can therefore provide a much-needed buffer when the unexpected occurs.
Although the coverage under the Sasria extension will be tailored to reflect each client’s needs, Sasria does provide cover for businesses within several key categories.
These include material damage, which covers damage to assets such as property, containers and equipment.
In the case of businesses that handle large volumes of cash, Sasria will also cover the loss of cash or cheques.
The product also covers all goods in transit on South African territory, whether by land, air or sea.
Sasria cover also includes motor cover for commercial fleets, as well as trailers and buses.
Due to the high probability that a business that has experienced a serious loss will also be faced with the cost of business interruption, this too can be covered under the Sasria extension.
How to take out Sasria cover
Even though the South African government remains the sole shareholder of Sasria, the cover is not automatically provided.
Cover must be purchased as part of a policy from an insurer that provides coverage for their assets, including property and/or property contents.
The only exception to this condition is that a client can obtain motor cover from Sasria without having the vehicle insured under its own, separate policy.
The premium for this cover will be collected by the insurance company who will issue the client with the Sasria-specific terms and conditions that apply.
The premium will also therefore be determined by the value of the assets that are covered by the underlying policy.
In the event of a claim, any client who has this extension will make their claim via the relevant insurance provider, who will process this on behalf of Sasria.
It’s therefore important to be aware of the availability of this kind of cover because it is provided as an extension rather than as a standard part of a personal or commercial insurance policy.
Your financial adviser will be able to assist you in choosing the appropriate level of Sasria cover.
Karen Rimmer is the head of distribution at PSG Insure.
* The views in this column are independent of Business Report and Independent Media.
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