Public loss adjuster Insurance Claims Africa (ICA) is urging the South African Special Risk Insurance Association (Sasria) to urgently pay riot-related claimants 30% of their insured sum upfront, in order to assist cash-strapped businesses get back on their feet as quickly as possible and prevent looming retrenchments.

The ICA is acting for a number of claimants who, together, constitute the largest volume of claims submitted to Sasria following the July riots in KwaZulu-Natal and Gauteng. 

ICA chairperson Mike Gaines says “claimants are living in limbo” while they await payouts to pay staff, restart their businesses, replenish stock and repair damaged premises.

“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,” he notes.

Sasria has also approached the National Treasury to assist with a shortfall in capital needed to meet the estimated claims of between R20- and R25-billion in claims, and Gaines says “this too will take some time to resolve”, while stating that 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”.

Gaines explains that paying 30% of the insured sum as an interim payment is a safe option for Sasria and will not leave it exposed or jeopardise the company’s long-term sustainability, because most claimants are under-, rather than over-insured.

“Sasria has authorised insurers to pay claims up to R1-million, and some of these claims are being paid out. But it’s not enough, it’s not quick enough and it’s prejudicing the larger claimants, many of whom run massive retail, manufacturing and food production businesses which urgently need substantial injections of cash.

"In fact, we are quite concerned that without larger, urgent interim payments, it may have an impact on food security in the country and will certainly impact our fragile economy negatively,” Gaines stresses.

The ICA has, however, warned clients from the outset that the claims process was going to take time and that they should manage their cash flow carefully. 

“But this is only possible for a limited time and even the larger businesses are now struggling. We have offered assistance to Sasria and are keen to be part of the solution in any way we can. The settlement of claims is going to take time, so interim payments are going to be critical.”