SASRIA
2 / www.enterprise-africa.net
SASRIA
Offering Security in Uncertain Times PRODUCTION: William Denstone
Sasria is South Africa’s only short-term insurer that provides affordable voluntary cover against special risks such as civil commotion, public disorder, strikes, riots and terrorism.
www.enterprise-africa.net / 3
INDUSTRY FOCUS: FINANCIAL SERVICES
//
Sasria was formed in 1979 as the South African Special Risk Insurance Association, in the wake of the increase of protests following the 1976 student uprisings in South Africa. Managing Director Cedric Masondo explains, the rationale behind Sasria’s formation was initially to provide insurance cover for such special political risks as political riots and terrorism. “Buildings were damaged by students and insurance companies didn’t want this type of business,” he states, “so they put in exclusions that damage caused by political riots wouldn’t be covered. Because there was a market failure, the government needed to intervene, so this company was formed.” Following success from its inception, Sasria’s mandate was further
4 / www.enterprise-africa.net
extended in 1998 to see the cover it could offer include non-political perils such as strikes and labour disturbances, keeping it set apart from every other insurance company. It was then converted to a limited company in 1998. Nowadays, every South African with an insurance policy for a house or car pays a premium to Sasria, starting from as little as R10 a month, and Sasria’s unique cover makes South Africa one of the few countries in the world to provide this insurance, particularly at such affordable premiums. The extensive range of Sasria products is available to any individual, business, government or corporate entity that has assets in South Africa. Its overarching aim, and central mandate, is to help nurture and support both positive growth and change in South
Africa by providing risk cover that offers certainty in a world that is often anything but certain nor predictable. This is still true of South Africa, in spite of the recent heightened political stability achieved in the country. While it may not be true to say that we are seeing a return to 1976 levels of unrest, Sasria’s payouts still rose 31% in 2016, largely because of the fallout from students in the #FeesMustFall campaign. Of the R766m claimed for the 2017 financial year, student protests accounted for R325m, or 42%. Masondo speaks of the unpredictability, and the way that these damages can occur seemingly from nowhere, that makes Sasria cover such a sensible, essential provision. “The nature of our insurance is man-made catastrophes,” he begins. “In our society
SASRIA
// IT’S A SAD REALITY THAT WHEN PEOPLE WANT TO MAKE A POINT, THEY DAMAGE PROPERTY // sometimes mob mentality dictates that people will do things that they will not do when they are on their own. “It’s a sad reality that when people want to make a point, they damage property. What’s worrying here in South Africa is the frequency…here it’s become day to day, with roads being blocked and cars damaged.” Despite the necessity of such protection, it is no secret that there exists still a general feeling among consumers and business owners that insurance is a ‘grudge purchase’, due to the perceived high premiums that many people have to regularly pay. Masondo himself estimates that only 2% of township residents have insurance, which includes spaza shops, routinely looted in attacks. “One time I was in Rosebank,” he recounts, “when there was a post office strike and someone petrol-bombed a post office vehicle. Within a week, we got that claim. For the township riots, whenever shops are looted, we don’t get any claims because they don’t have cover. They’re the ones getting hit by service-delivery protests. “It’s sad because the spaza shops have nothing to do with the complaints and they’re the real victims. Those people have lost all their stock and no one even bothers to talk about them.” The specialist role that Sasria plays makes it arguably most appealing to businesses, as it gives them the ability to quickly and efficiently restore their liquidity and recommence operations after experiencing loss or damage resulting from the special risk events against which the cover is designed to protect. It is central to preventing job losses, maintaining livelihoods, restoring pride and dignity and
facilitating economic stability in the event of such unrest. Sasria has undertaken extensive research to pinpoint where insurance cover is needed most in the South African market. Its findings reveal that the need for inclusive insurance is becoming increasingly relevant in the local environment, and as a consequence, is working on bringing a solution to those small and mediumsized businesses (SMEs) who form part of the lifeblood of a community, such as spaza shops. “When their assets get damaged due to protests or are looted, the actions of a few people cause the whole community to suffer,” says Fareedah Benjamin, Sasria’s Executive Manager for Insurance Operations. “We’re taking the cover we offer for specialised risks (including, among other things, material damage, business
www.discovery.co.za
interruption, money, goods in transit and motor and construction risk) to SMEs in the uninsured market,” says Benjamin. “If something happens to these establishments, they are very exposed; if their shops are looted, it will take a long time to recover the damage.” Benjamin notes that in the past, there has been a limited amount of insurance products offered to SMEs, especially those operating in an informal environment. “Additionally, many people believe that insurance is an expense they can’t afford to carry. Our traditional products have been very affordable in terms of what we offer. We’re taking the existing product and aligning it to the limit and cover in terms of what the client needs and what we can cover.” In response to the long-standing and often inaccurate perception of
@Discovery_SA
discoveryinsureSA
Discovery Insure Ltd is an authorised financial services provider. Registration number 2009/011882/06. Limits, maximum fuel, Gautrain and Uber spend limits, terms and conditions apply. Go to www.discovery.co.za for more details or call 0860 751 751. GM_51045IN_20/02/2018_V2
www.enterprise-africa.net / 5
INDUSTRY FOCUS: FINANCIAL SERVICES
// WE WANT TO UNDERSTAND THE TRIGGERS BECAUSE THAT INFORMS US ABOUT TRENDS THAT ARE GOING TO GET WORSE // insurance as an unattainable luxury, Sasria is developing a business model which will see it target a new segment of the market - those people who do not want or cannot afford regular insurance, but do wish to purchase Sasria cover, perhaps because previous of damage to or looting of their property. To reach them, the organisation will adopt a hybrid model in which it still operates on the back of traditional insurance
6 / www.enterprise-africa.net
policies, but also now markets its services directly to the public. A test phase in the townships will take place in 2020, and in the meantime Sasria will continue to analyse the risks facing South Arica and ensure that it has sufficient income from its premiums and its investments to keep pace with the ever-present threat of disorder. As Masondo states, this has led to the company consulting sociology professors at several universities to try to pinpoint the reasons behind disruptive behaviour. “We want to understand the triggers because that informs us about trends that are going to get worse,” he says. “It’s our job to inform the government and tell them where the riots are coming from, and the cause.” Letlhogonolo Tau, Customer Relations Manager at Sasria, has also declared the importance of having
insurance covering special risks for property owners, exactly because unforeseen circumstances are now a part of daily life. “Having insurance is a way to protect your assets,” is his belief. “In most cases, home and business owners purchase properties that are bank financed. If the property is burnt during a strike and you don’t have insurance cover on the property, then banks expect you to pay for damages and the remaining loan.” Sasria has standard insurance that could cover damages up to a value of R500 million, depending on the cover taken, which is ideal for homeowners and small businesses. For many, meanwhile, the purchase of a car is one of the most expensive that will be made in a lifetime. At times of unrest, however, they are some of the first and most valuable elements in the firing line of rioters. In September of last year, for
SASRIA
// OUR PERFORMANCE UNDERLINES OUR COMMITMENT AND ABILITY TO HONOUR OUR CUSTOMERS’ CLAIMS // example, during a protest which was possibly related to a mineworkers’ strike, a truck and a bus were set on fire in Lephalale, Limpopo. This was followed in August by three cars being burnt and another 15 vehicles damaged in Westville, outside Port Elizabeth. To insure a vehicle for private use against strikes or unrest only costs from R2 per month or R20 per annum, and in the case of the total loss of the vehicle,
Sasria will pay out the retail value of the vehicle. For individuals this means peace of mind, but, for business enterprises that use vehicles in the delivery of services and good, this sort of insurance can mean the difference between success and failure. Sasria offers special risk cover for cars, light delivery vehicles, commercial vehicles, fleet vehicles, car dealerships, mobile plants, taxis, express service buses and trailers. “It is my pleasure to report on another solid year for Sasria, despite a dramatic increase in claims and difficult macro-economic circumstances,” begins Masondo’s assessment of the past twelve months for Sasria, a year which has seen a 9.5% increase in gross insurance premiums to R1.84 billion and net investment income increase over 40% to R413 million. “Taking the challenging operating context during this year into account, it
is evident that we have again delivered a solid performance,” he goes on. “Above all, we continue to cover South Africans against the special risks of civil commotion, public disorder, strikes, riots and terrorism and pay all valid claims promptly in line with our status as a financial safeguard against these potentially catastrophic events. Our balance sheet remains strong, with the SAM solvency capital requirement (SCR) cover ratio at 246%. Our performance underlines our commitment and ability to honour our customers’ claims. “Despite the challenges facing our country and our industry, we remain committed and confident in our ability to deliver on our mandate and strategy.
WWW.SASRIA.CO.ZA
www.enterprise-africa.net / 7
CMB Multimedia does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Multimedia Ltd 2017
AFRICA
THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@cmb-multimedia.com Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-multimedia.com www.cmb-multimedia.com
March 2018
www.enterprise-africa.net
EXCLUSIVE INTERVIEW WITH ABB SA CEO LEON VILJOEN
Technology Focus Powers ABB’s African Growth ALSO IN THIS ISSUE:
Jawbone / AutoTrader / Dis-Chem / Attacq
AS FEAT UR ED IN
ENTERPRISE AFRICA
MAR CH 2018