- Insurance Claims Africa has recommended that Sasria pay 30% of the insured amounts to big businesses affected by the July unrest up front to provide interim relief.
- Sasria fast-tracked payments to businesses that had claims of up to R1 million.
- The ICA says this prejudiced bigger businesses with complex claims, and they are now desperate for cash.
Two months after the devastating July unrest burnt some businesses to the ground, many business owners are still hamstrung by the complexity and value of their insurance claims.
The South African Special Risk Insurance Association (Sasria) is the only insurer covering claims caused by riots, civil unrest and terrorism, and vandalism caused by public disorder. Although it has been inundated with claims since July, the state-owned insurer has promised to pay, and it instructed private insurers to go ahead and settle claims of up to R1 million to speed up the process.
However, according to Insurance Claims Africa (ICA), many companies have reached a desperate stage due to the long time it takes to finalise bigger and complex claims.
"Claimants are living in limbo - they are desperate for cash to pay staff, restart their businesses, replenish stock and repair damaged premises," said ICA chairperson Mike Gaines.
The public loss adjustment firm championed the fight for Covid-19 business interruption in 2020. Now, it represents a number of claimants whom it said make up the largest volume of claims submitted to Sasria.
The ICA is asking Sasria to pay those waiting for the finalisation of their claims 30% of their insured sum up front to provide interim relief. It believes that this will help cash-strapped businesses get back on their feet and prevent looming retrenchments.
"We know from our experience with the Covid-19 business interruption claims that these interim payments made by insurers were a lifesaver for many businesses while they waited for the complex and lengthy claims settlement business to proceed. It's going to be the same for these riot-related claims," said Gaines.
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Gaines said the ICA was not concerned about Sasria's ability to pay these claims as it has approached Treasury to secure the shortfall on the amount it needs to cover all claims.
"Sasria is a good, well-managed business in whom we have great trust, but they have never had to deal with claims on this scale and complexity before," added Gaines.
He said the ICA warned its clients from the outset that the claims process would take time and that they should manage their cashflow carefully. However, they could only do so much after two months of trying to make things work. He said now, even the larger businesses are struggling.
Fin24 has approached Sasria to hear if it would consider the ICA's recommendation and to get an update on how the insurer is expediting large and complex claims. Its responses will be added to this story once received.
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