With more affordable motor vehicles becoming available, there was an appreciable increase in the volume of traffic on South African roads.
This increase, together with the fact that more powerful vehicles were being manufactured, led to a growth in the number of people injured and killed in vehicle accidents.
While victims or their dependants had the right to claim damages from the wrongdoer in terms of the common law, the reality was that many wrongdoers were not financially able to meet the claims.
On the other side of the coin, wrongdoers faced the risk, and often the reality, of being left destitute by having to compensate persons they had injured, or the dependants of persons who had died because of their negligent driving.
Then came the introduction of Compulsory Motor Vehicle Accident Insurance.
The history of the Road Accident Fund (RAF) and its predecessors spans more than 60 years, with various acts of Parliament governing road accident victim compensation in South Africa since 1942.
Compulsory Motor Vehicle Accident (MVA) Insurance was introduced in 1946.
Prior to August 1, 2008, all aforementioned acts provided that injured persons or their dependants, should, with certain exceptions, receive full compensation for loss or damage suffered because of bodily injury or death caused by the driving of a motor vehicle.
Simultaneously, the wrongdoer was absolved from liability, except where the acts provided for limited compensation.
On August 1, 2008, the provisions of the Road Accident Fund Amendment Act, No 19 of 2005 (RAF Amendment Act) came into operation, which introduced certain limits on recoverable damages and removed the claimant’s common-law right to sue the wrongdoer for damages not recovered from the RAF.
The long legacy of South Africa’s third-party insurance system, now administered by the RAF, is inequitable, inefficient and unsustainable.
It is vulnerable to widespread abuse and necessitates transformation to create a reasonable, equitable, affordable and sustainable social security system, to take care of the needs of road crash victims and their families.
The numerous challenges that have plagued the MVA compensation system include: service delivery problems; restricted access to medical care; long settlement delays; spiralling costs; insufficient funding to pay claims; an ever-growing liability; multiple complex and legalistic hurdles due to the adversarial nature of the system; high intermediary costs; and uncertainty as to whether compensation is ultimately used for the intended purpose.
The financial challenges in particular have negatively impacted the RAF’s operations, and its ability to carry out its core mandate, which is to cover, compensate and rehabilitate victims of road crashes and their dependants.
The first actuarial deficit, of just under R1billion, was reported as far back as the 1990s. This deficit has grown steadily to R214bn, as of March 31, 2018.
Liquidity challenges have resulted in an inability to pay all debts when due, which has led to the routine attachment, removal and sale in execution of RAF assets.
Since the first enactment of MVA victim compensation legislation, numerous commissions of inquiry were appointed to investigate the many challenges faced by the RAF’s predecessors.
The last commission of inquiry into MVA systems in South Africa was the Road Accident Fund Commission, headed by Judge Kathy Satchwell, which was appointed in June 1999 to “inquire into and to make recommendations regarding a reasonable, equitable, affordable and sustainable” system of road accident victim compensation.
Upon conclusion of its work, the commission recommended the establishment of a new scheme, the Road Accident Benefits Scheme (Rabs), which would implement a no-fault system that would then provide for benefits in the form of periodic payments to be governed by an approved tariff, subject to thresholds and monetary ceilings.
Various cabinet decisions have followed, together with the principle of phasing out RAF in exchange for a reasonable, equitable, affordable and sustainable system.
A new dawn
Rabs is a logical progression on the RAF’s existing transformative path, which to date has been driven by various productivity enhancements and organisational realignments.
Successes include: the instigation of management interventions to optimise claim payments; implementation of efficient operational processes; the backlog of open claims being reduced; an increased prevalence in direct claims; new strategies being fulfilled; fraudsters being arrested; and more claimants being assisted daily.
During the 2016-2017 financial year, the RAF achieved 90percent of its annual performance targets for the second year in succession. The year also marked the fourth clean audit in recent years from the Auditor-General.
Other highlights include: a total of 202100 new claims being registered and a record 209561 being finalised (as opposed to 188864 and 188759 respectively in 2015-2016); a reduction in the number of open claims to 173740 from 184899 in 2015-2016 on the back of increased registration of claims; over R901million worth of fraudulent claims being identified before payment; and 418 cases being referred to the South African Police Service.
Meanwhile, the RAF has increased its footprint countrywide to more than 100 hospital service centres, six customer service centres and five regional offices, thus improving accessibility to claimants, their families and dependants.
Two mobile offices have also been acquired to travel the length and breadth of South Africa in order to provide critically needed services on people’s doorsteps.
Rabs proposes that the open-ended liability that the RAF dispensation imposes on the country be wound down, and a solvent arrangement be introduced.
It will benefit many people who have not had access to the RAF, but the pay-off would be a rationalisation of what is paid out on the upper end.
Poor people will benefit from a minimum benefit they do not currently enjoy.
Accidents remain a growing concern, with a total of 11676 road traffic fatal crashes recorded from January 1 to December 31, 2017, resulting in 14071 fatalities, according to the Road Traffic Management Corporation. Road crashes also have adverse implications for economic growth, as they affect economically active members of our society.
It is in this context that the RAF will continue its transformation from an institution once perceived as incompetent, uncaring and wasteful into one driven by a pursuit of excellence in service delivery, which makes a difference in the lives of those affected by road accidents.
Lindelwa Jabavu is the acting chief executive of the Road Accident Fund.
The views expressed here are not necessarily those of Independent Media.
- BUSINESS REPORT