An effective solution to mitigating the risks of natural disasters in South Africa is to establish a national Nat CAT insurance pool, according to the CEO of the non-life company PSG Insure, Mr Cedric Masondo.
In an article he wrote for FANews, he said, “We already have a precedent: SASRIA, which covers strikes, riots, and unrest – risks the private sector cannot underwrite alone. SASRIA works because it’s a collective, state-supported mechanism that gives the market scale and resilience.”
He added, “We need a similar model for climate-driven disasters. A dedicated CAT pool could aggregate risk, enable broader coverage, and ensure faster payouts when floods or droughts occur. It could also take pressure off national disaster relief funds, which are often depleted or delayed.
“The government must take the lead in establishing such a pool, but the private sector has a key role to play too. It not only brings technical expertise and underwriting capacity but also claims infrastructure and deep risk knowledge."
State-owned South African Special Risk Insurance Association (SASRIA) is the only insurer in South Africa that provides special cover for risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorder.
Finance Minister Enoch Godongwana said in SASRIA’s 2023/24 annual report, which was released in autumn 2024, that the insurer was participating in engagements with the government, regulators, and other relevant stakeholders on potential ways to expand its coverage. “During 2023/24, these engagements centred around possibly extending SASRIA’s coverage towards climate risks, extreme weather and cyber attacks,” he said. Legislative changes have to be made for SASRIA to underwrite natural catastrophe risks.
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