President Cyril Ramaphosa has unleashed the Special Investigating Unit (SIU) on state-owned nonlife insurer the SA Special Risks Insurance Association (Sasria) over claims and payouts relating to 2021’s civil unrest in Gauteng and KwaZulu-Natal.
Ramaphosa authorised the SIU, where the workload is piling up, to investigate “serious maladministration in connection with the affairs of Sasria relating to the receipt, capturing, processing, verification, assessment, authorisation and payment of claims related to the July 2021 civil unrest”.
Sasria told parliament after the unrest in 2021 it had incurred more than R30bn in claims. It is these claims the SIU will circle to check if they were paid out legally and to the right people in an investigation that might reveal rot in the organisation.
Asked about the SIU investigation, Sasria executive manager for stakeholder management Muzi Dladla said on Sunday internal reviews had not indicated significant issues with the payment of about R32bn in claims. However, he said after the unrest claims surge in 2021 it “reached out to the SIU, flagging several claims with heightened fraud risks and procedural issues observed under challenging processing conditions”.
“Sasria requested the SIU’s oversight to help investigate certain claims that appeared potentially fraudulent. This may have contributed to recent considerations for external oversight.
To date, Sasria has neither received formal communication nor allegations concerning irregularities in claims payments related to the July 2021 unrest
— Muzi Dladla, Sasria executive manager for stakeholder management
“To date, Sasria has neither received formal communication or allegations concerning irregularities in claims payments related to the July 2021 unrest. There has been no official directive from the office of the president, nor has the SIU formally contacted us about any investigation or related claims issues.”
Mpumi Tyikwe was appointed Sasria CEO in April 2022, succeeding Cedric Masondo, who stepped down for an opportunity in the private sector via JSE-listed PSG Konsult as CEO of its insurance business.
The July 2021 unrest, after the arrest of former president Jacob Zuma for refusing to comply with a Constitutional Court order that he testify at the state capture inquiry, caused billions of rand in damage to public and private property, which put Sasria in a unique position to process claims.
Sasria provides unique cover against risk of riots and public disorder, making it the only insurer in the country with that risk appetite. It covers individuals, businesses and government entities that own assets in SA. The entity was established in 1979 in response to the Soweto youth uprising in 1976.
According to the Reinsurance Act, the insurer may only cover four perils, namely political and non-political unrest, terrorism and labour unrest.
Sasria told legislators a year ago it had unprecedented claims and losses due to the July 2021 unrest, having fielded nearly 17,600 claims totalling R30.7bn, far exceeding its annual claims of about 3,700.
The entity received a R22bn cash injection from the fiscus to assist in paying the claims. The sheer number of claims saw Sasria appoint external auditors to help process them, with the insurer admitting this led to some claims being paid twice, though the funds were later recovered.
Sasria needs north of R20bn more to build up its reserves to R30bn in preparation for future catastrophic events.
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