The political riots that wrecked havoc in some parts of KwaZulu Natal and Gauteng during July 2021, did the opposite of feeding into efforts to resuscitate the economy to pre-Covid 19 levels. Hundreds if not thousands of businesses were forced to close, goods looted, with private property and public infrastructure vandalised.
In a statement on 28 July the Minister of Finance estimated that the damage in KwaZulu Natal alone stands at R15 Billion, which by far exceeds the capitalisation of the public entity which is liable for loss emanating from public disorder, riots, and violence, being SASRIA.
On its own part, the SASRIA had issued a statement through Fareedah Benjamin, before the 28 July Ministerial statement, that it is three times better than its required market capitalisation.
However, the situation on the ground may well spell out surprise for the SASRIA in the following ways.
Firstly, business organisations are projecting worse damage than what official statistics hold. Tiger Brands Ltd estimated it lost R150 million in stock, while 109 of Mr Price’s clothing stores were looted clean and others closed.
A lot of medium and small businesses who also suffered immense damages are still in the process of assessing and lodging their claims with SASRIA and the full impact will only be known a while later when the majority of claims have been lodged and quantified.
Secondly, business interruption claims for those that hold such cover with SASRIA may far exceed estimates owing to the fact that as long as SASRIA is still attending to assessment of the claims, such interruption will still persist as the businesses will not be fully operational.
It is a certainty that SASRIA staff may have not dealt with claims of such magnitude at once before and therefore this spells that claims will likely take long. In fact some claims have gone for two years under SASRIA’s processes.
This in turn means the businesses that are seeking compensation to bounce back into operation will still persist under crippled circumstances, thereby shooting the claims up further.
However, despite the immediately above SASRIA authorised insurance companies to process claims under R1 million that fall within the ambit of its liability.
This is a hopeful development.
Notwithstanding the damage to business confidence and private foreign investment in South Africa, the full extent of the physical damage and the compensation required will be fully appreciated in a few more weeks to come after the majority of claims have been lodged and quantified.
The announcement by the National Treasury that it will boost the reserves of SASRIA by a further R3.9 billion and more if needed puts paid to forecasts that the real damage on the ground far outweighs the estimates.
Van Deventer & Van Deventer Attorneys strongly advises that individuals and businesses ensure that they have adequate cover so as to avoid disappointments when they lodge claims at insurers.
We comprehensively assist with Insurance Law and related matters, whilst fully prepared to guide individuals and businesses in this complicated area of law and commerce. Kindly make contact with us for comprehensive assistance in these and other matters.
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