In the last year, conversations have been constant in how shocking the July unrest was, and how we – as the insurance fraternity, business and all South Africans – reacted positively towards the restoring, rebuilding and regaining lost steps.
The violent looting in KwaZulu-Natal and Gauteng last year cost hundreds of lives and resulted in the economy losing above R50 billion, while also cementing business uncertainty and scaring off investors and reinsurers. It ranks among one of the most unfortunate and dire events in South Africa’s 28-year-old democracy.
Listening to the recent hearings by the South African Human Rights Commission, South African government leaders, including President Cyril Ramaphosa, have shown leadership in largely acknowledging that the July unrest negatively impacted our economy – a development that can lead to a fiscal threat, scaring off much-needed investment.
More than ever, there is now an urgent need for all of us in the insurance industry fraternity, with brokers in particular playing an active role in raising more awareness relating to civil unrest risk. We believe in an advice-led approach that empowers customers with relevant information and education.
Why Should We Care About Special Risk?
Testimonial evidence heard at the SAHRC hearings by some witnesses have proven that threats to the fiscus – emanating from sovereign risk – are real and need to be investigated as they could have dire economic implications that can affect the state, particularly in the event of a disaster.
The government is best suited to utilise a measurement that looks at what kind of impact is associated with fiscal threat, and what kind of eventuality this could have.
We all know that South Africa does have several challenges, such as service delivery protests, riots, looting and business interruption which can mean financial losses such as reduced sales and unplanned cost of working to business.
In this light, the state looks at contingent liability and other uncertain eventualities, such as natural disasters, systemic social unrest, among other concerns that pose a fiscal threat.
This is concerning. We need to have one unified voice and put defences in place to help alleviate the pressure on claims resulting from special risk incidents. It's not an easy task, but one worth pursuing.
What Roles Do Key Stakeholders Play?
Based on the above regarding special risks, there is a need for stakeholders to play a more involved role,as we ought to challenge ourselves to find integrated management solutions between the public and private sectors.
Sasria works closely with insurance companies to ensure that we provide suitable insurance solutions for clients. We see brokers also playing a pivotal role as we work towards the identification of future risks – normally associated with a fragile environment in South Africa.
A lot was learnt from the July unrest last year. We cannot afford to put a foot wrong as we work hard towards a more feasible approach to assist with handling incidents such as these, and not be caught by surprise. It’s in this light that Sasria appreciates its stakeholders and wants them to be more involved in dealing with potential risks associated with South Africa.
The forecasting of upcoming risks, such civil unrests and food security are some of the likely developments we should anticipate soon. Fairly, we cannot predict or tell when these would occur but we can be better prepared to handle the eventuality.
Public-private partnerships have worked wonders in the past when it comes to integrated risk management approaches. This is encouraging as we aim to foster current relations and realise new ones. This can even be made more successful with the creation of a central functionary point that can be run independently from government and the private sector to harness the strengths of both sectors.
Importance Of A Broker-Led Industry
The unprecedented July unrest showed the entire insurance fraternity how brokers can play a leading and pivotal role that can go a long way in not only rendering intermediary service and giving advice, but also assisting in the uncovering of curated products that address market needs.
That’s the one part. The second part is that of the elevation of education that brokers can play, particularly when it comes to clients such as small business enterprises that are either under-insured or have assets but don’t understand the important role Sasria plays.
The education role would further expand on understanding the risk of not being properly covered or not covered at all.
The education role takes the shape of helping clients make better decisions when it comes to risk, and what lies in the horizon but is currently unseen. How can they access Sasria? How can they be helped so that they don’t pay steep insurance premiums? These are questions brokers can help unpack as they further assist clients understand the diverse and preventative roles the state plays when it comes to civil unrest.