What are the student protests costing the country?

16 March 2016 Jonathan Faurie
Sasria MD Cedric Masondo

Sasria MD Cedric Masondo

Since November last year, the public have been watching the havoc at the country’s universities unfold with an element of frustration and disgust. As we view the violence, we can only but wonder when this will end and how much it will cost the insurance industry.

The short answer to this is that the task ahead is immense. In an interview with FAnews, Sasria MD Cedric Masondo reports that claims valued at R100 million have been lodged with Sasria over the past year, R70 million of these claims have been lodged in the last five months alone.

The violent masses

Sasria has come a long way since the debates in 2000 where the company’s relevance was brought into question. We saw xenophobic attacks in 2008 and 2013, and we have seen the recent student uprising.

Student dissatisfaction is not something new to the country. However, the current mobilisation of students has never been seen since the 1970s.

Trouble started to brew with the #Fees Must Fall campaign where students protested against increasing university fees as well as the outsourcing of certain jobs at the university. This carried on well into December when the situation seemingly came to an impasse.

However, we have seen renewed protests over a number of issues. And not only have the protests jeopardised the academic calendar, but there has been extensive damage to universities and property in the wake of the protests.

Empathy and frustration

Those of us that have children at university probably have their own story to tell about the frustration they feel about the scenes that have seemingly died down. Sasria itself has also had to sit on both sides of the fence as Masondo tells the company’s story.

“We always expect an element of tension when students come back from vacation. But we never expected it to get this intense. There is a sense of empathy for students who are struggling to come up with the finances to pay for education. As a government owned company, Sasria has a corporate social investment programme where it pays for the tuition of selected students who are in dire financial situations. So on the one hand the company lends a helping hand where it is needed, and then we see this violence playing itself out. Nobody can condone the use of violence to achieve an objective,” says Masondo.

The company is safe

While the current state of the protests are concerning for the company, Masondo assured us that the company is sufficiently capitalised to meet its current claims.

This may take some time. As Masondo points out, when damage reaches the extent that it did at the University of the North West - where the whole administration building and science wing of the university were burnt down – claims take long to resolve. “We are currently capitalised enough to handle the claims that are placed at our doorstep. However, this is not a quick fix scenario,” adds Masondo.

The risk horizon

It is a reality that Sasria’s situation can change over the next few years. Masondo points out that the frequency of claims are increasing by 50% every year, and this is a concern for Sasria. If this increases in the same vein going forward, Masondo points out that the company may be treading into dangerous territory in terms of its financials.

Added to the current student uprising is the municipal elections later this year which always sees some instances of violence. And in 2019, we have presidential elections. Sasria therefore have a tough five year horizon ahead of them where political and social violence could flare up at any time.

“The five year horizon poses many challenges. However, if we look beyond this at the ten year horizon, things look a bit better,” says Masondo.

Editor’s Thoughts:
We live in testing times. It seems strange that in the early 2000s there was a debate about the relevance of Sasria in the industry. How long can the insurance industry live with these violent situations before Sasria increases its rates? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

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