Sasria yesterday raised the red flag, saying youth unemployment is a ticking time bomb. File ANA
State risk insurer SA Special Risk Insurance Association (Sasria) has asked National Treasury for a six to eight year dividend payment hiatus to build up its reserves to at least R30 billion. The call was prompted by insurance payouts due to the historic July unrest to the tune of R31bn and the looming prospect of youth unemployment, which the entity deems imminent.
Sasria CEO Mpumelelo Tyikwe said yesterday, that youth unemployment was a ticking time bomb amongst people who had the capacity to wreak immense destruction, and called for all sectors to address the challenge.
"When we talk about state failure implications, it is the level of destruction that can occur and how we would be able to deal with it. There is an exceedingly high level of youth unemployment. Look back to that the 1976 riots were initiated by the youth. If they had to start reacting to the status quo (it) would cause extensive damage," he told Parliamentarians.
He told Parliament’s Select Committee on Finance that Sasria was in a good financial position with an increase in premiums and more than R4bn in reserves, and a loss ratio below the 55% mark. The lower the ratio, the more profitable the insurance company, and vice versa.
Sasria has shelled out R30.7bn this far on the July 2021 unrest, R10.4 million for the truck torchings, R13.3m after the National Student Aid Finance Scheme (Nsfas) triggered students protests, and a total of R356m so far for the taxi strike in Newlands, Cape Town.
He said in the last two payments, Sasria had to make excess payments of R130m for R6.5m worth of cover and R411m for R5.8m cover payments.
“Sometimes we feel the insurance market is overreacting hence we are asking government to give us a guarantee so we can build up our reserves," Tyikwe said.
Tyikwe said in as much as Sasria had made its independent assessment and consulted widely, there was an extremely remote prospect of a total grid collapse by Eskom.
"There are better prospects now of the grid not failing, the capacity that will come through in late October or November we hope will put Eskom ion a better place," Tyikwe said.
He said Sasria was seeing higher premiums because of the many triggers in the local environment, including floods in KwaZulu-Natal and the Cape Coast, the July 2021 unrest, Covid-19 claims, inflation, greylisting and the high unemployment rate.
He said the risk triggers in the country had seen a significant premium hike making South Africa a very difficult country to cover with insurance.
“There are some analysts who are predicting another catastrophic event soon. We hope it will not be all that sooner, but these are the things that push the premiums up,” Tyikwe said.
He said emerging risks in the local economy that Sasria foresaw included a failed state, destruction of public infrastructure, grid failure, the illicit economy, cyber-attacks and climate change all of which were already manifesting.
Tyikwe said with Sasria’s limited (ability) to cover labour unrest, political and non-political protests as well terrorism, there was a need to review the legislation to allow for floods, pandemics, and catastrophes such as the ongoing Avian Influenza to mitigate the damage.
BUSINESS REPORT
Related Topics: