South African Insurer Sasria Excludes Coverage for Electricity Grid Failure Claims

South Africa's state-owned insurer, Sasria, has announced that it will no longer offer coverage for claims arising from a potential total collapse of the national electricity grid due to civil unrest.

The decision, prompted by pressure from the reinsurance market, comes as the country grapples with some of its most severe load-shedding periods and prepares for increased energy demand during the upcoming winter season. Business Day reported the insurer's move, highlighting previous calls from reinsurers to remove coverage for claims resulting from electricity grid failure caused by unprecedented levels of load shedding.

Sasria, which traditionally provides coverage for strikes, riots, and other forms of civil unrest, stated in a circular dated April 28th that starting from June 1st, both existing and new policies would exclude coverage for electricity grid failure. The circular emphasized that the insurer would not indemnify clients for any loss, damage, cost, or expense directly or indirectly caused by, arising out of, or in connection with electricity grid failure. This exclusion would apply to any riot, strike, or public disorder associated with electricity grid failure. Sasria had previously relied on government assistance after widespread theft and property damage during riots in 2021. In response to the situation, reinsurance partners,  including those at Lloyd's, have increased rates and expressed concerns about a potential recurrence of such events. 

Source: reinsurance.ws