Primary insurance for damage from terrorist acts is provided by the National Special Risks Association (NASRIA). NASRIA was established in October 1987 and has been operational since January 1988, following cancellation of reinsurance facilities previously available to the conventional insurance market for acts of terrorism and politically motivated acts. The Namibian government currently acts as ultimate reinsurer, but the protections to NASRIA’s retention are very conservative in efforts to avoid drastic losses to the government. To avoid gaps in cover, NASRIA includes riot, strike and labor disturbances, which were previously excluded from conventional policies.
Before 1979, private insurance companies in South Africa offered insurance cover only for riot, strike and malicious damage. Due to an escalation of politically motivated violence and damage in South Africa during the late 1970s, gaps of cover were created from the lack of conventional insurance market cover for politically motivated acts. When the Soweto Riots of 1976 occurred, many insurance companies stated that they would not cover claims stemming from damage due to politically motivated acts. As a consequence of the withdrawal of the conventional cover, the South African Insurance Association (SAIA) created the South African Special Risks Insurance Association (SASRIA) on January 25, 1979, under terms of Section 21 of the Companies Act of South Africa. Its participating members are all the insurance companies that write fire coverage. Participation in SASRIA embodied reinsurance obligations of each member company, and in turn the South African government would act as reinsurer of last resort.
The primary objective of SASRIA, a registered insurance company, is to provide insurance cover to protect assets against certain defined events, particularly politically motivated acts including terrorism and political riot. In January 1987, the Finance Act was amended to extend the cover granted under SASRIA to cover all riot, strike and public disorder, regardless of the motivations.
As a precondition to receiving cover from SASRIA, an underlying fire policy cover must exist to cover the conventional insurance risks (non-motor). Insureds have an automatic right to cover with SASRIA, with the primary insurer acting as an agent of SASRIA. Insureds must be covered for every insurable risk so that in the event of a claim either the SASRIA policy or the underlying policy can respond, thereby eliminating any gaps in cover. There is a loss limit of ZAR300 million (USD37 million) per one insured entity per calendar year. Companies with insured values in excess of ZAR300 million are entitled to a loss limit discount which is calculated on a sliding scale. The higher the total asset value, the higher the discount. Such companies are referred to by the SASRIA policy wording as “One Insured” entities. There is a government stop-loss for reinsurance of ZAR1 billion (USD123 million) in excess of reserves and reinsurances.
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