Brokers brace for higher strike, riot and civil commotion covers
You do not need to remind South Africans what happens when citizens take their unhappiness to the streets. In July 2021, civil commotion and looting incidents in parts of Gauteng and KwaZulu-Natal caused over R50 billion in economic losses, the brunt of which were carried by the country’s state-owned special risks insurer, Sasria SOC Limited.
PVT versus SRCC
Political Violence and Terrorism (PVT) and Strike, Riot and Civil Commotion (SRCC) cover were up for discussion during the latest Insure Talk webinar, with thousands of insurance professionals in attendance. Themba Sibiya, Executive Manager: Underwriting and Strategy at Sasria got his presentation underway by distinguishing between political violence, terrorism and the combined SRCC perils.
He explained that political violence (PV) cover was designed to respond to the damage or losses accompanying protests aimed at bringing about regime change, or consequent to such change. SRCC type covers are mainly geared towards covering damage or loss caused by individuals or pockets of society who are unhappy about aspects of their lived experience. And finally, terrorism is perpetrated by individuals or groups seeking to influence a government or state to achieve a particular objective.
According to Sibiya, PVT and SRCC have become increasingly intertwined with bigger picture themes such as economic growth, social challenges and state security. He commented on succinct differences in how damage and loss events play out in the global North versus the global South. People in post-colonial societies often “see the state as an antagonist, someone you need to fight … whereas the colonisers focus on social issues and how to refine state policies,” he said.
Global North versus global South
“The emphasis in the former colonised nations is more about class accessibility, improving the lives of people and making sure that people are not adversely impacted,” Sibiya said, citing the Arab Spring and South Africa’s June 1976 uprising against apartheid education as examples. The 1976 uprising was among a series of unrest events that led to the establishment of Sasria in 1979. At the time, local insurers lobbied government to create a special risks pool because they were uncertain whether their balance sheets could withstand emerging PV exposures.
The way in which PV and SRCC loss events gain momentum has changed significantly over time. In the 1960s, the printing press featured strongly, as organisers used newspapers and printed placards to carry their messages. Community and political leadership featured strongly too, spreading the message to audiences in community halls and similar. Radio and television played their part, though there were significant difficulties in carrying political messages in countries with tight state control of the media.
“Today’s challenges are compounded by social media; the use of social media during the Arab Spring [saw] things escalate from a small protest to one that affected an entire region,” Sibiya said. The combination of social media and widespread internet access means that a narrative or call to action can be disseminated and take hold at record pace. Of greater concern is that the advent of artificial intelligence (AI) makes it possible for threat actors to concoct false narratives or automated disinformation.
The disinformation threat is on the rise
“The PVT / SRCC space is evolving, and we are seeing that in as much as [where before] there was a formation of a large number of people, there are [now] lone rangers [who are often] radicalised by what they consume within the social media space,” the presenter said. This type of disinformation is often the driving force in anti-government movements or domestic activism such as the January 2021 storming of the US Capitol Building, or the July 2024 storming of the presidential palace in Bangladesh.
The presenter offered some interesting insights into the size of the global PVT / SRCC market versus that for natural catastrophe (NATCAT). Data supplied by Swiss Re puts the average global NATCAT losses at about USD108 billion per annum, with 2024 topping USD146 billion, and a whopping USD500 billion in global reinsurance capacity. By comparison, manmade catastrophes (including PVT / SRCC) amount to just USD10 billion per annum, with very limited reinsurance capacity on offer.
The R32.5 billion in claims paid by Sasria post South Africa’s July 2021 event has pushed the country closer to loss levels seen in South America. But there are also growing concerns in international risk pricing circles that the consequential SRCC loss event could occur on the back of a NATCAT event. “Lloyd’s have done some modelling around a NATCAT event taking place, and then being followed by an SRCC event,” Sibiya said.
He opined that the damage and business interruptions caused by a mega flood event such as what South Africa saw in KwaZulu-Natal in April 2022 could, therefore, easily lead to service delivery related protests and subsequent SRCC claims.
30-fold increase in riot, strike and civil commotion
To make matters worse, Swiss Re has reported a more than 30 times increase in SRCC claims between 2000 and 2020. “The key drivers here are economic inequality and hardship; political repression; social media amplification; and urbanisation,” Sibiya said. South Africa is a case study for most of these constructs, as evidenced by the mix of informal, semi-formal and formal urbanisation in juxtaposed areas like Sandton and Alexandra, or Cosmo City and Steyn City.
Surprisingly, the stats show that while South Africa tops the table in terms of sheer number of protests, it does not lead in number of protests per million citizens. The honours go to Brazil, Kenya, Nigeria and even eSwatini. The presenter further noted that seven of the top 10 risks flagged in the 2025 Santam Risk Barometer had some link back to socioeconomic concerns such as climate, economic growth, infrastructure failure, political risk, rising cost of living and unemployment.
His challenge to commercial and corporate clients was to reassess risks from a consumer perspective. “Commercial and corporate clients are concerned about crime, the challenging economy, poor infrastructure, political unrest, cybercrime, climate change, and regulation; but crime is mainly driven by things that worry the consumer including unemployment, poverty and inequality,” he said. “There is some correlation in terms of the underlying drivers for the things that concern both the corporate world and the consumer.”
Major loss triggers reinsurance dilemma
South Africa’s July 2021 civil commotion and looting event was singled out as an extreme example of SRCC, with the state-owned insurer incurring R32.5 billion in claims in just nine days.
The incident affected every sector of the economy from banks to retailers to transport firms, and Sasria has struggled ever since to find capacity for its SRCC reinsurance programme. Sibiya commented on significant changes in policy wordings and restrictions as global insurers and reinsurers sought to underwrite the book properly. He also noted that volatility in global PVT / SRCC segments would continue until such time human issues are addressed.
The audience was warned of high levels of instability in the Sahel region of Africa driving PVT prices, and rising unemployment as a potential driver of future SRCC losses in South Africa. As for Sasria, the special risks insurer is enhancing its business intelligence tool to give it clearer insights into protest activity across the country. The insurer is going as far as social media monitoring to figure out where the next corruption or service delivery flashpoint might arise.
Writer’s thoughts:
Local insurance brokers understand that a repeat of the July 2021 civil commotion event could once again push SA’s special risks insurer to the brink. Will Sasria’s business intelligence tool give adequate warning, and does government have the capacity to intervene? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
