Sasria is a truly unique South African SOE, the only provider of coverage to all individuals and companies holding assets in the country against risks such as strikes, riots and terrorism.
- Sasria told Parliament that he plans to use Rand 22 billion from the National Treasury to cover credits from the July riots and improve his solvency position.
- Sasria CEO Mpumelelo Tyikwe said that if Sasria maintains its claims relationship, the insurer will be able to replenish its reserves within five to seven years.
- He said if the police had responded to last year’s riots in time, the volume of requests would likely have been half of what they ultimately became.
Sasria told Parliament’s Standing Appropriations Committee that he plans to use a newly insured cash injection of Rand 22 billion from the National Treasury to pay off the remaining credits and meet the insurer’s solvency requirements.
In April, Sasria also briefed the Standing Committee on Finance and told members of parliament that the National Treasury stepped in to assist the insurer as it faced compensation claims for more than Rand 37 billion following the riots in July 2021. in KwaZulu-Natal and Gauteng.
During that meeting, the insurer told Parliament that it expects to record a loss of more than Rand 26 billion by the end of the current financial year and said it would not be able to cope with a repeat of the volumes of claims it saw after the riots last year.
On Wednesday, Sasria’s chief executive Mpumelelo Tyiwke said the insurer will have Rand 14.5 billion in cash equivalents by the end of 2021/22, which it will use to process claims.
He said the insurer has existed for more than 40 years without recording a loss.
It said the claims volumes for Sasria increased from 2,976 in 2020/21, worth 778 million Rand, to 20,996 claims worth 38 billion Rand in 2021/22.
“To evaluate the performance of an insurance company, we use the loss report or premium complaints. Over the past 10 years [before last year]the loss ratio only went above 45% once – in 2019. We have had years of profitability in the last 10 years, except for this year, “Tyikwe said.
Tyikwe said Sasria planned to use the National Treasury’s money injection to keep up with the remaining credits and maintain a favorable solvency position. He said this funding would not be spent on other items.
“The loan will be used to pay off the credits that arose – which were close to R37 billion. It will also be used to recapitalize Sasria to meet the solvency requirement. The money will not be used for any other purpose,” Tyikwe said.
Tyikwe said that if Sasria kept her loss ratio between 35% and 45%, the insurer would be able to replenish her reserves within five to seven years, allowing Sasria to get back to where she was before. riots in July.
In the case of the July riots, Tyikwe said that if police or security forces responded within 48 hours as expected, the volume of inquiries would likely be half of what it was in the end. A recent report on the riots showed slow police response on the ground.
“As members will know, the panel report indicated that the police did not respond as quickly as possible [have] for the rest. We could have avoided [many] of the claims we have seen, and Sasria would have avoided insolvency claims and would not have requested an injection of money, “he said.
Tyikwe said Sasria agent companies processed and helped pay 90% of complaints valued at R1 million or less. He said that Sasria does not foresee liquidity problems thanks to the injection of 22 billion R2 and that Sasria could meet the liabilities that would arise in the future.
“Sasria would have been able to handle a riot event of up to R17 billion in credits. Sasria is planning future scenarios like the July riots, but the insurer and the National Treasury are aware of our limitations,” he said.
Tyikwe said the insurer was developing new products and solutions, including products for informal merchants and grocery store owners, as well as a mobile application.
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