South African individuals, businesses and government entities can obtain cover
against risks such as civil commotion, public disorder, strikes, riots and terrorism,
making South Africa one of the few countries in the world that has an insurer that
covers these risks at very affordable premiums.
The writer has always been proudly South African in respect of being a part of the
robust financial services industry here and often quote Sasria as a fine example of
some of the few unique additional important protection mechanisms that have been
structured for our often-unique risks and exposure.
The development of Community Scheme Specific policies over the years has also
seen the adaption of traditional policies and the morphing of products to cater for our
specific risks. For example, in other counties, underwriters are intrigued when we
compare some of our South African sectional title policy benefits to theirs. At one such
meeting I had with senior Strata underwriters in Perth a few years ago, they were
fascinated by the fact that we needed to cover things such as “theft of items from a
building” and still with limits. Sasria also perked their interest.
On the one hand, it can be quite amusing that we have to be creative in terms of our
risks here, yet more solemnly, it is so important that we do.
Legislation has also accounted for this. The Sectional Titles Schemes Management
Act – and more specifically Regulation 3 – states that bodies corporate must insure
against “riot, civil commotion, strikes, lock-outs, labour disturbances or malicious
persons acting on behalf of or in connection with any political organisation.” This
certainly formalises the need. However, this compulsory requirement does not
necessarily apply to Homeowner Associations (HOAs) as this will depend on their
governance documentation (MOI) in the case of NPC schemes and constitution
documentation where applicable to schemes otherwise constituted.
Historically, Sasria SOC Ltd was established after the increase of protests following
the 1976 uprisings. The name Sasria originates from its original foundation – South
African Special Risks Insurance Association. As there was no insurance that covered
assets against strikes and riots in the private sector domain at the time, the
government then decided to fund and manage its own short-term special risk
insurance company focusing on political risk. Sasria SOC Ltd’s mandate was extended
in 1998 to provide cover for non-political perils such as strikes and labour
disturbances.
Ordinarily, these risks are excluded from most policies globally, this includes standard
South African policy wordings.
Just a couple of years ago, the disturbing increase in non-political events such as
transport sector actions and Fees Must Fall type protests were highlighted. It raised
the awareness that South Africa has a well-structured insurance infrastructure with
both the private and government sector providing cover against disaster. The increase
in riot and strike related claims then already was quite disturbing. Sasria’s claim tempo
and ratios are seen by some as a barometer of South African society, especially in
respect of socio-economic dissatisfaction. The events of the past few weeks have
certainly vindicated this view.
Unfortunately, it is human nature “not to worry about things” until they actually happen.
It is only when serious unrest unfolds, are insurers, insurance advisors, managing
agents etc. inundated with calls as to whether the caller has such cover. During recent
events, this is exactly what happened.
What should trustees do?
It is correct that the trustees and directors should check whether they have such cover
included in their polices.. Most of the community scheme policies automatically include
this cover and brokers/brokerages who/which specialise in community scheme risks
will naturally ensure that each scheme they advise, has such cover.
However, there are instances where policies may not have cover or where there are
mixed use schemes. Such residential and commercial risks may not have been
properly identified and the insurer may not thus be fully aware of the commercial
element. Trustees can check with their brokers that the correct disclosures have been
made in this regard.
What should Managing Agents do?
There is no doubt that the managing agent is recognised as the scheme’s para-leal
advisor and very often relied upon to find the right broker to look after the scheme’s
needs.
Managing Agents should check that their scheme’s broker has properly dealt with the
Sasria needs, particularly those schemes where commercial elements such as shops
downstairs are present.
Make sure that written Annual Advice from the broker is on record and that a proper
assessment of the risks have been undertaken.
NAMA members who have attended seminars on insurance over the years will be
reminded that we sound like a stuck record as we repeatedly encourage managing
agents to make use of the services of brokers who are experienced and well-versed
in community scheme risks. When disaster strikes, the schemes under a member’s
management will want the policies to respond immediately and appropriately. The
scheme’s broker needs to be properly resourced, experienced and have access to the
necessary experts to intervene without delay.
Our experience with Sasria claims, despite our positive approach to Sasria, is that
such claims do tend to take longer than usual to be finalised. In one such instance,
our brokerage arranged bridging finance so that reinstalment could commence
immediately, settlement following some weeks later.
As such, given the large number of schemes we are assisting in our role as care
intermediaries throughout South Africa, we have pre-arranged bridging finance for all
of our Sasria claim affected clients via NAMA affiliated community scheme financier,
ZDFin. Finance in this instance will be at prime interest rates, subject to T&Cs of
course. This is another South African initiative morphed from the joint Addsure-ZDFin
understanding of risks and needs of schemes during these times. It also lends
credence to the importance of the cooperation and meeting of minds of NAMA
affiliated specialists.
Sasria seems to recognise the need to fast track claims and last year noted that they
were investing in more information technology to achieve this end. Sasria also recently
announced, in the wake of the recent unrest that their agents (the insurer) “may settle
claims up to R50 000 (fifty thousand rand) on claims relating to the recent events,”
subject to all conditions met. Claims in excess of R1 million will take longer, because
assessors and loss adjusters will still have to be appointed in line with the special risk
insurers’ mandates and in the normal course.
Brokers need to ensure that Underwriter Management Agencies and insurers who
issue policies of insurance to bodies corporate include Sasria cover and that the
correct rates have been applied. Commercial sections and residential use sections
must be accounted for and in cases of mixed use, sometimes two coupons may be
necessary.
One of the mitigating measures we are also now introducing to scheme clients in
Johannesburg is the concept of schemes subscribing to a Private Fire Station Service,
called Fireops. Extra measures are really worth considering where local infrastructure
and resources may be lacking or overwhelmed in such circumstances. Schemes
should ensure that emergency measures are in place and that their fire equipment is
fully operational and compliant. We all expect the best possible preventative measures
to be in place at our schemes and that when disaster strikes, the fastest and most
appropriate responses occur.
In conclusion, we should all be aware that the root causes of such recent events will
take years to rectify or improve and for as long as the underlying socio-economic
causes and political risks remain festering, the risks remain high. Recent events are a
wake-up call, and we should take extra measures to protect our families, homes,
assets, etc. and reduce risks. Sasria cover being in place is one important thing, but
we still need to ensure that we are doing the right things to ensure we comply with any
conditions and take the best precautions to minimise risks.
