R22 billion allocated for South African Special Risk Insurance Association

“Beyond the financial responsibility, Sasria will also revise premiums, evaluate reinsurance agreements, and explore opportunities to expand its customer base to bolster its ability to respond to risks,” Gungubele said.

Government has allocated R22 billion for the South African Special Risk Insurance Association (Sasria) in the current financial year to assist the insurer in settling claims and guaranteeing that it has adequate capital to fulfil regulatory requirements.

Speaking at the debate on the Second Adjustments Appropriation Bill (2021/22 financial year) during the National Assembly hybrid sitting on Tuesday, Acting Finance Minister, Mondli Gungubele, said the amount includes R3.9 billion through the Second Special Appropriation Act (2021), R11 billion through the Adjustment Budget, and R7.1 billion through Section 16(1) of the Public Finance Management Act to respond to unforeseen and unavoidable events.

“Beyond the financial responsibility, Sasria will also revise premiums, evaluate reinsurance agreements, and explore opportunities to expand its customer base to bolster its ability to respond to risks,” Gungubele said.

Gungubele highlighted that since its establishment in 1979 and its 43-year existence, Sasria has never experienced an event on the scale of the 03 July 2021 unrest, and has thus far been able to honour its financial obligations.

He said public unrest, strikes, rioting, and acts of terrorism are encompassed in the risks covered by Sasria's short-term insurance.

“Government has reaped dividends amounting to R12.8 billion from Sasria. However, in 2021, Sasria faced its gravest challenge yet, because of the July unrest, which resulted in R32 billion worth of claims.

“This left Sasria technically insolvent and unable to satisfy its financial commitments nor sustain its regulatory obligations such as a minimum solvency cover ratio (SCR) of 100% mandated by the Prudential Authority. Our goal as government is to ensure that Sasria is financially stable,” Gungubele said.

Turning to the Adjustment Appropriation Bill, Gungubele said the provision of an adjustment Bill is an important piece of legislation in the country that allows the state to react with agility to deploy financial resources to cater for adjustments due to significant and unforeseeable economic and financial events.

The Minister said the debate was set under a global economy with the Russia-Ukraine conflict resulting in higher fuel and food prices and mounting inflationary pressure.

This, he said, was in addition to a local economy that is experiencing low growth and high unemployment, recovering from the COVID-19 pandemic, the riots of July 2021, and most recently, the floods in KwaZulu-Natal and parts of the Eastern Cape and the North West.

“This Second Adjustments Appropriation Bill is necessitated on two grounds. The first is an additional deployment of financial resources towards the sourcing of vaccines against the COVID-19 pandemic. This includes a further R500 million to the National Department of Health to pay for COVID-19 vaccines and associated costs of logistics.

“Secondly, the Appropriation Bill is about deploying financial resources to Sasria. This adjustment is due to the financial impact of the 2021 July civil unrest. It is a fact that 2021 was a difficult year for our country, as we struggled to navigate our way through and mitigate the adverse economic and social disruption caused by the COVID-19 pandemic. We were faced with unanticipated violence, looting and destruction of public infrastructure that took place in July,” Gungubele said.

The Appropriation Bill, which was tabled in Parliament by Finance Minister, Enoch Godongwana on 23 February 2022, provides for the appropriation of money by Parliament from the National Revenue Fund (NRF) as required by section 213 of the Constitution and section 26 of the Public Finance Management Act (PFMA).

(With Inputs from South African Government Press Release)