State-owned insurer Sasria has estimated that days of civil unrest across South Africa to drive insured losses of 10 billion rand ($683 million).
Sasria told Reuters that the losses would mostly stem from damage and theft from businesses, following widespread vandalism and looting, which has impacted thousands of properties and damaged major infrastructure.
The rioting was triggered by the jailing of former President Jacob Zuma, and has left more than 70 people dead so far.
Sasria was set up in 1974 after private insurers stopped underwriting political violence risks in South Africa, and so will be responsible for covering any losses arising from the unrest.
But Managing Director Cedric Masondo told Reuters that while the company has reinsurance cover that runs into the high single digits and can fund up to 10 billion rand of claims from its own balance sheet, it only covers customers up to a threshold of 500 million rand.
As a result, larger companies may have to deal with some of the loss costs themselves, if they have suffered significant damage.
With disruption now stretching into its sixth day, the South African government has sought to deploy about 25,000 troops to curb unrest, amid fears of food and fuel shortages.
The South African Insurance Association (SAIA) has welcomed the security interventions and expressed confidence in the ability of Sasria to provide for the anticipated claims.
“The Sasria model is a good example of how the public and private sectors can work together to provide solutions to individuals and businesses in South Africa,” the Association stated.
“Our member insurance companies and the broker fraternity, together with Sasria, will be working tirelessly to ensure that policyholders are assisted to get back on their feet as soon as possible.”
So far, most of the violence has centred around former President Zuma’s home province of KwaZulu-Natal, as well as Johannesburg and surrounding areas in the Gauteng province.