JOHANNESBURG, Aug. 24 (Reuters) – South Africa’s only insurer to cover political violence will increase its premiums to cover a surge in reinsurance costs after some of the worst unrest in decades, the head of the state-owned company told Reuters.
More than 300 people died and around 3,000 stores were looted when protests and violence broke out in July, sparked by the imprisonment of former President Jacob Zuma, but later fueled by anger over poverty and inequality.
Sasria, which was founded after private companies stopped taking the risk of political violence during apartheid, currently estimates unrest-related claims at Rand 18 billion ($ 1.19 billion), according to a presentation on Monday ).
It relies in part on reinsurance contracts, and the cost of those contracts is now rising, executive director Cedric Masondo told Reuters by phone.
“We’re going to increase the rate because of the increase in reinsurance,” he said, not wanting to say by how much. He said the timing of the increase has not yet been set
A circular communicating the decision to Sasria agents – local private insurers – was posted on their website on Aug. 4. It said the increase would take effect from October 1.
With Sasria being the only company that offers insurance coverage for political risk, companies across the country could expect higher premiums when seeking protection from losses related to events such as strikes or protests.
Masondo said it remains to be determined whether all customers will be affected.
The insurer’s standard coverage offered by agents is a maximum of R500 million, while larger companies that contact Sasria directly have an additional RAR 500 million available.
Some of the coverage is also available on the open market, especially for large companies looking for protection over and above the top performance of R.1.5 billion offered by Sasria.
A senior executive at a global insurer who refused to be identified told Reuters that he will also increase its property insurance tariffs as a result of Sasria’s decision.
($ 1 = 15.0770 rand)
Reporting by Emma Rumney and Promit Mukherjee; Letter from Emma Rumney; Editing by Mike Harrison and Jan Harvey
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