State-owned special risk insurer, Sasria is in talks with the Treasury to plug a financial hole caused by claims of up to R25 billion, arising from the looting and destruction in KwaZulu-Natal and Gauteng in July.
On Tuesday, Parliament was told that Sasria’s liabilities exceeded its assets, making it insolvent.
While Treasury has already agreed to a cash injection of R3.9 billion, the insurer’s board chairperson Moss Ngoasheng said this was “completely inadequate”.
Sasria is the only insurer in the country that offers cover for damage from riots, strikes, terrorism and other public disorder.
Ngoasheng said Sasria had a balance sheet of R9 billion but was facing claims of between R20 billion and R25 billion.
A gap that he said would not be plugged by the R3.9 billion the Treasury had already committed to give it.
“Sasria is seen as a national asset, and therefore, we need to recapitalize it and make sure that it can continue to provide insurance that it is providing at the moment,” Ngoasheng said.
Parliament select committee on finance was told on Tuesday that so far, 98% of claims have been reported, while R2.8 billion has already been paid out.
Sasria expects to pay 80% of claims for less than R20 million by next month, and 80% of claims for below R60 million within the next six months while talks with Treasury for a further cash injection are under way.
Treasury’s director-general Dondo Mogajane told the meeting it would be preferable if Sasria expanded its market base in order to become sustainable again. The company hopes to return to profitability next year.
-EWN
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