RISK cover from just 180c per month!
Sasria was established to offer government-backed property cover for political riot at a time when South Africa was at war with itself. After 14 years of democracy' we ask Sasria managing director' Phyllis Mabasa' whether the insurer is still relevant.
Mabasa admits that South Africa doesn't have the kind of riots that occurred in the mid 1970s' 1980s and early 1990s' but points to the changing global risk environment as Sasria's main reason for being. While Sasria still covers riots' political risks and strikes on a day-to-day basis' "there is a much bigger threat looming'" says Mabasa' referring to events like the September 2001 attack on the World Trade Towers in the US. The modern day Sasria is "more of a ‘catastrophe' insurer concentrating on terrorist threats!"
That doesn't mean conventional risks are out of the picture. The insurer's 2008 Annual Report lists claim settlements for the year in the following categories: political riot (17.48%)' non-political riot (33.57%)' labour disturbances (2.28%) and strike (46.67%). "There's been a lot of activity around the Bus Rapid Transport (BRT) system and trains recently'" says Mabasa' adding that a single bus costs more than R1 million to replace. Sasria recently received a claim for 31 burnt buses! There are concerns that worsening economic conditions will lead to an increase in non-political riots and demonstrations in coming months.
Risk cover from 180c per month
An individual policyholder will find it almost impossible to better the deal offered by Sasria. "There's no reason for anyone taking on the risk of getting your property destroyed when you have the alternative of paying R1.80 per month'" says Mabasa. As long as the cover remains affordable there's no reason for Sasria agents – the majority of short-term insurers operating in South Africa – to remove these covers from property lines.
Changes in the pipeline
We asked Mabasa if there were any areas where Sasria could improve – perhaps by extending its product offering. She dispels any possibility of Sasria entering the conventional insurance market on a competitive basis' saying Sasria has "no intention of going into the products that the insurance market is currently underwriting." But some changes would be announced soon.
"We are going into a new five year rolling strategic plan and with that there will be a number of products that we will be introducing into the market'" says Mabasa. The two major proposals will impact on larger commercial policies. The first is a likely upping of the current Sasria cover of R500 million. "We will be looking at increasing our limit' as well as looking at increasing the scope in terms of the covers that we currently provide." Perhaps future Sasria covers will include business interruption!
A word on government
Sasria recently cancelled its management contract with government' which in turn withdrew its R1 billion underwriting guarantee. We asked how Sasria's only shareholder could simply remove its backing. Mabasa says the contract with government had little to do with Sasria operations – relating instead to the organisations' management of funds held on government's behalf. And the R1 billion guarantee was subsequently replaced with appropriate reinsurance contracts. According to Mabasa' government remains "a 100% shareholder of Sasria and – whatever happens – the responsibility will ultimately fall on them!"
Sasria expects further business improvements in 2009. Mabasa says the company has achieved premium growth of around 14% per annum over the last five years; but for the current year is "looking at about 20% to 21%". And that makes the company as relevant today as when it first opened.
