Violence took South Africa by storm in July of last year. Former South African president, Jacob Zuma was sentenced to 15 months’ in prison after eight months in court. While the deadline for Zuma to hand himself over to the authorities encroached, calls to action were made (largely on social media) encouraging citizens to make the country ungovernable, resulting in social unrest from 8-17 July 2021. News 24 reports that 354 citizens were killed and R50 billion was racked up in damages. SASRIA (The South African Risk Insurance Association) was left with thousands of claims amounting to billions of rands in damage. On 5 August 2021, the current president of South Africa, Cyril Ramaphosa, issued a report to be written in the aftermath. He selected a number of experts for a panel to elaborate on the cause of the unrest.
While Zuma’s imprisonment has been identified as a trigger to the events that followed, there are other underlying factors. The 154-page Expert Panel document identifies a number of “crises and challenges” that led to country-wide instability resulting in the events of July 2021:
1. Frail State institutions
2. Staggering unemployment rates and no plans to address the issue
3. The high levels of poverty and inequality in the country
4. Unsuitable living conditions for a large percentage of the country
5. Unrestrained corruption at all levels of government
6. Sponsored State Capture in a South African context
7. Challenges following the COVIS-19 pandemic
SASRIA reported that the riots that took place were the most expensive since their establishment. According to Moonstone, SASRIA predicted various plausible emergency scenarios including terrorist attacks, breakdowns in energy provision and national shutdowns, yet even so, their assessments did not predict the sheer amount of violence, damage, and looting that took place during July of 2021. The riots have had a lasting effect, not only on citizens but on insurers all over the country. The Conversation states that despite the anniversary of these events, justice is yet to be served.
BusinessTech reports that while those suspected of orchestrating the riots in Gauteng and Kwa-Zulu Natal have been named, not a single person has been convicted. Furthermore, SASRIA has stated that they will be unable to provide cover should these events repeat themselves. SASRIA was detailed to have paid out R37 billion over a span of 14051 claims. The majority of the claims were contributed by fire commercial claims. In order to manage their finances, SASRIA has restricted major retailers to a maximum cover of R 500 million. Reinsurer group, Lloyd’s of London, has increased their premiums tenfold in the expectation that similar riots could take place in the future. SASRIA reported that they have increased their number of employees and ensured rigorous damage assessments are being made to prevent fraud as a response to the tension.
Should you have any questions concerning business interruption insurance, please feel free to contact us. Deo Gratia is here to assist you in any way we can. You can either send us an email or use the chat function to the right of the screen.
