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Riot insurance
Tuesday, August 1, 2000
Disposed towards….

There is still a need in South Africa for insurance against damage to property caused by political acts as provided by SASRIA Ltd (formally the South African Special Risks Insurance Association), according to a proposal on the future of SASRIA developed by the Board of Directors of the South African Insurance Association (SAIA).

The Minister of Finance, in line with legislation passed in 1998, is now taking steps to dispose of the State’s shareholding in SASRIA, says Barry Scott, chief executive of SAIA. “However, there is still a need for SASRIA cover, particularly with a view to the ongoing labour market instability, high levels of unemployment, land rights disputes and the generally high levels of political aspiration which may flare up into civil commotion.”
SASRIA was incorporated in 1979 as an association not for gain. “Due to the short-term insurance industry not being prepared to underwrite the risks in question, the government agreed, in the public interest, to act as reinsurer of last resort. The government conferred monopoly status on SASRIA by allowing it to be the sole supplier of insurance cover for special risks in the country.
“In 1998 Parliament passed the Conversion of SASRIA Act, by which it was converted to a public company with a share capital. The entire share capital is held by the State and the State’s obligations as a reinsurer were terminated.”
The Act also stated that the Minister of Finance was required, after consultation with the short-term insurance industry to dispose of the State’s shareholding in SASRIA. “The Minister has now advised that the State wishes to dispose of its shareholding.”
SAIA’s proposal forwarded to the Minister of Finance for consideration also suggests that the existing monopoly needs to remain in place, as SASRIA will not be able to compete with the market without it. Adds Mr Scott, “The non-refusable and non-cancellable basis of cover also needs to remain, in the interest of the consumer.
“Regarding ownership of SASRIA it is proposed that a share be offered to black-empowerment groups, the State be encouraged to retain a share and the remainder of the share to be offered to the insurance industry. Any residual share could be offered to the general investing public.”
 

Copyright © Insurance Times and Investments® Vol:13.7 1st August, 2000
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