SASRIA projects R26bn loss in 2022 financial year

The South African Special Risk Insurance Association (SASRIA) is bracing for a significant loss of 26 billion rand in its 2022 financial year, a stark contrast to the profit it recorded in the previous year. The looming loss can be attributed to the avalanche of claims that followed the civil unrest in July last year, forcing the state-owned insurance entity to seek a gargantuan 22 billion rand capital injection from the National Treasury. To gain insights into SASRIA's current status and future prospects, CNBC Africa sat down with Muzie Lala, the Executive Manager of Stakeholder Management at SASRIA. Lala shed light on the progress of the claims process, indicating that SASRIA has already disbursed around 23 billion rand to impacted parties. However, with a total claims tally of approximately 37 billion rand, there is still a significant portion of claims to be settled, particularly those related to large-scale rebuilding efforts. Despite the outstanding amount, Lala reassured that SASRIA is committed to fulfilling its financial obligations to all claimants, including prominent enterprises like Clicks. Furthermore, the discussion delved into SASRIA's solvency standing, with Lala acknowledging the prudential authority's concerns regarding the entity's ability to meet long-term debt payments. Currently boasting a solvency ratio of 68%, SASRIA aims to elevate this figure to 115% by June. Lala emphasized that the expeditious settlement of claims is imperative for enhancing the solvency capital ratio, which is crucial for meeting regulatory requirements and ensuring financial stability. Despite the projected loss for the upcoming financial year, Lala assured stakeholders and the public that SASRIA's robust capital reserves and risk management strategies mitigate the need for additional financial aid from the government. He underscored that the solvency capital requirements incorporate potential losses, equipping SASRIA to weather significant events without resorting to shareholder funding. Touching upon SASRIA's growth initiatives post the July riots, Lala highlighted the success of the entity's mass marketing campaigns and premium adjustments. These efforts have resonated positively with the market, resulting in a notable revenue increase from 2.7 billion to 3.2 billion rand. The enhanced visibility and accessibility of SASRIA's insurance offerings have facilitated broader coverage inclusion and revenue growth. In conclusion, while challenges loom on the financial horizon for SASRIA in the wake of the anticipated loss, the organization's proactive measures, sound risk management practices, and strategic growth endeavors position it for resilience and continued progress in the insurance landscape.