Sasria CEO Cedric Masondo gives update on civil unrest claims

The South African Special Risks Insurance Association (Sasria), a public enterprise established to offer insurance coverage for damage caused by special risks such as riots, strikes, terrorism, and public disorders, has disclosed that it has disbursed 12.6 billion rand in claims linked to July's civil unrest until now. Cedric Masondo, the CEO of Sasria, joined CNBC Africa to discuss the outcomes of the claims and the strategic plans moving forward. According to Masondo, while 12.6 billion rand has been paid out in claims, an additional 11 billion rand is expected from the Treasury. Despite this injection, the total value of the claims Sasria has received amounts to a staggering 32 billion rand. Explaining the funding strategy to bridge this gap, Masondo outlined that Sasria boasted a strong balance sheet of approximately 10 billion rand in assets before the riots, coupled with infrastructure valued at 6.5 billion rand. Additionally, the organization generates a monthly premium that aids in financing their daily operations. The CEO highlighted that the Treasury's 3.9 billion rand contribution, announced in August, along with an 11 billion rand supplement and existing balances, will serve as substantial financial backing. Looking ahead, Sasria plans to enhance its rating structure considering the risk landscape and the impacts of the July riots, with a premium rate increase anticipated effective from February 1st next year. While the extent of the increase remains contingent on comprehensive analyses of business classes, an average rate rise of about 30 percent is expected. Addressing claims rejections, Masondo revealed that just under one percent of claims had been declined, often due to inadequate coverage or misalignments with Sasria's policies. The organization has two main product offerings, covering losses of 500 million and 1 billion rand, with the largest exposure topping 1.5 billion rand. Despite significant claims falling below the 1 billion mark, Sasria is focused on fortifying reserves to ensure its enduring sustainability. This strategic approach entails a thorough review of rates to align with risk profiles, as well as restructuring the insurance framework to safeguard capital, especially considering the government's capital injection. While the loss incurred this year is substantial, Sasria anticipates a return to profitability next year and aims for sustained profitability going forward. In response to a query regarding a notable 1.5 billion rand claim, Masondo refrained from disclosing the client's identity but noted that media reports have highlighted sizable claims from various sectors, including retail, super malls, and warehouses. Reflecting on lessons from the civil unrest, Masondo emphasized the efficacy of Sasria's collaborative business model with private sector and government entities in mitigating duplications and enhancing operational efficiency. Additionally, the CEO underscored the imperative to extend support to small businesses in townships that were adversely impacted by the unrest, signaling a proactive approach to engaging with these clients moving forward.