Claims for damage and theft from businesses affected by civil unrest in South Africa are likely to be between R7 billion and R10 billion ($481 million to $683 million), the head of the only insurer covering political violence in the country told Reuters.
Days of riots and looting have left more than 70 people dead, hurt thousands of businesses and damaged major infrastructure in some of the worst civil unrest in decades.
Triggered by the jailing of ex-president Jacob Zuma last week after he failed to appear at a corruption inquiry, its has widened into an outpouring of anger over poverty and inequality.
Sasria, a state-owned insurer set up after private firms stopped underwriting risks relating to political violence due to unrest during apartheid, has received around R100 million in claims so far, its managing director Cedric Masondo told Reuters, adding this was expected to rise significantly.
The company, the only insurer to offer cover for such risks, expects total claims of up to R10 billion, or R12 billion in a worst-case scenario – making the unrest likely the most significant event in terms of the value of claims since Sasria was set up in 1974, Masondo continued.
“This is the worst in terms of financial magnitude,” he said.
Masondo said while Sasria has re-insurance cover that runs into the high single digits and can fund up to R10 billion of claims from its own balance sheet, it only covers customers up to a threshold of R500 million.
This will mean smaller firms will likely see their losses insured in full, while major companies that have suffered significant damage are likely to have to shoulder some of the cost themselves.
Some 40 000 firms have been affected in the Ethekwini municipality in the province of KwaZulu-Natal alone, with damages in the area put at R15 billion, according to its mayor.
Violence has been concentrated in KwaZulu-Natal, Zuma’s homeland, as well as the country’s economic and financial centre of Johannesburg and surrounding areas in the Gauteng province.