ROAD ACCIDENT FUND

1
ROAD ACCIDENT FUND COMMISSION
2
Significance of Road Accident Benefits

• 900 000 vehicles in road accidents
• 130 000 injuries and 10 000 deaths
• R2.7bn raised by fuel levy
• 80 000 loss occurrence events/150 000 claims
• Transaction costs known R620m unknown costs
• Further costs pain and suffering, lost
  productivity, healthcare burden, duplication of
  pensions

3
Mandate
4
Reasonable (p.10)

• A reasonable system of road accident compensation
  should acknowledge the symbiotic relationship of
  road accident compensation with the broader
  system of social security and its objectives.
  There should be moderation without extremes of
  generosity or meanness. The system should be
  sensible in its ambitions and reflective of both
  the needs and resources of the South African
  society in which it is founded. The system should
  be purposive in conception and not a piecemeal
  mixture of legislative amendment.

5
Equitable (p.11)

• A system of road accident compensation must be
  equitable in that there must be proportionality
  between the funding of the system and the demands
  made thereon. There should be impartial and
  unbiased treatment of road accident victims and
  their families. The purpose and effect of such a
  system should be supportive of justice and
  fairness as between road accident victims and
  their families. There should be some balance or
  congruence between the benefits made available to
  road accident victims and the benefits made
  available to other South Africans in need.

6
Affordable (p.10)

• An affordable system of road accident
  compensation should be within the financial means
  of road users and South African society as a
  whole. The system (in its funding demands,
  administration costs and social security
  benefits) must provide value to road users in
  South African society.

7
Sustainable (p.10)

• A sustainable system of road accident
  compensation must be efficient in its
  accessibility and administration. The system
  should be facilitative of health care and
  rehabilitation as also the alleviation of
  financial hardship and anxiety. There should be
  reinforcement of the broader system of social
  security which in turn should be supportive of
  road accident compensation. Any such system must
  be long lasting in its availability to road
  accident victims who are reliant thereon.
  Accordingly the system must remain financially
  and morally viable in the eyes of all South
  African society.

8
Questions

• Is there any rationale for the intervention of
  the State in the fate of the victims of road
  accidents in a manner more advantageous to them
  than to victims of violent crime, birth defects
  or household accidents? p.11
• In the event that rationale is found to justify
  legislative intervention and State regulation of
  a system of compensation of benefits to the
  victims of road accidents then For whose benefit
  does the State intervene? Is intervention for the
  benefit of negligent vehicle drivers or for the
  benefit of victims and survivors of road
  accidents? p.12

9
Questions

• Should such intervention be viewed as a system of
  insurance or part of State administered social
  security benefits?
• Should State intervention be limited to
  facilitation of funding a system of road accident
  compensation or should the State be concerned
  with the establishment of a structure to
  administer provision of compensation or benefits?
• p.12

10
Questions

• What should be the nature of any compensation or
  benefits made available to victims of road
  accidents?
• What should be the extent of compensation or
  benefits?
• To what extent should a system of road accident
  compensation be integrated within the provision
  of other social security benefits?
• p.12

11
Stakeholders p.99

• Road user
• Taxpayer
• Government
• (other role players agents servants
  facilitators)

12
Outline of Report Volumes 1 2

• Current situation chapters 3 14
• Policy issues chapters 15 25
• Current compensation proposed benefits
• chapters 26 36
• Delivery chapters 37 42
• Table of Contents

13
Research Results Volume 3

• Analysis of claims finalized by the RAF in
  1998/1999 Human Sciences Research Council p.21
• Analysis of road accident injuries 1998/1999
  Medical Research Council p.217
• Research into lump sum payments of compensation
  to road accident victims Strategy Tactics
  p.407
• AMA Guides case studies Dr D Fish p.481

14
Research Results Volume 3

• ICF case studies World Health Organization
  
  p.497
• Impact of HIV/AIDS on road accident benefits
  Centre for Actuarial Research p.531
• The cost of healthcare for road accident victims
  at public hospitals Dr J Herbst /MRC
  
  p.547
• Actuarial valuation of recommendations
  NMG-Levy Actuaries p.569

15
Current Scheme

• Road Use chapters 3 5 pp. XII, 37-101
• Claims and Compensation
• chapters 6 8 pp.XIV, 101-179
• Funding chapters 9 11 pp.XV, 179-277
• Transaction Costs chapter 12 pp.XV, 277-309
• Abuse chapter 13 pp.XVI, 309-349
• Evaluation chapter 14 pp.XVI, 349-373

16
Current Scheme of Compensation

• Levy on fuel (18,5c/l) to RAF
• Motorist at fault
• Innocent victim claims compensation
• Compensation medical expenses, funeral
  expenses, loss income/support, general damages
• Once-and-for-all lump sum compensation
• Compensation unlimited
• Wrongdoing motorist indemnified

17
Urban South Africa
18
Rural Areas South Africa
19
Rose
20
The home of Rose
21
The backyard
22
Bedsores
23
Evaluation p.350

• Failure to claim from the RAF
• Ignorance of the RAF Ability to claim
  Exclusion by fault
• The claims process
• Delay Transaction costs Inconvenience Prospects
  of success
• Compensation
• Exclusion Cause above need Unequal
  treatment Allocation Nature More to the
  wealthy Financing
• Delivery
• Consumer experience

24
Evaluation p.367

• Exclusion (pp.368, 373 427)
• Fault (pp.369, 513 584)
• Allocation of compensation (pp.369, 160 177)
• Unlimited compensation (pp.370, 160 177, 428
  467)
• Transaction costs (pp.370, 277 307, 309 348)
• Lump sum payments (pp.371, 585 664)
• Delivery (pp.136-160, 351-357, 360-367, 546-553,
  616-637, 1183-1285)

25
(Figure 10.6 Total petrol and diesel
consumption in South Africa and RAF income from
the fuel levy p.223 Source SAPIA Annual
Report 2001 RAF Annual Reports)
26
(Figure 8.9 Distribution of claims paid
according to extent of injury p.171 Source
HSRC Report)
27
(Figure 26.3 Injuries with the highest impact on
the compensation system p.802 )
28
Distribution of Claim Size
29
Categories of compensation
30

(Figure 8.13 Distribution of compensation paid
per compensation category 1999 p.174 Source
HSRC Report)
31
The Claims Process

32
Time Period (Figure 17.9 Average years from
accident to settlement, according to seriousness
of injuries Vol.3, p.188)
33
(Figure 12.1 Utilisation of RAF Income 1999)
p.282
1999
Transaction costs 483 - 21 RAF Admin
expenses 129(6) RAF (Legal Experts) 125(5)
Claimants (Admin, Legal Experts) 227(10)
34
(Figure 12.1 Utilisation of RAF Income 2001)
p.283
2001
Transaction costs 619 - 23 RAF Admin
expenses 179(7) RAF (Legal Experts) 134(5)
Claimants (Admin, Legal Experts) 306(11)
35
Distribution Transaction Costs
p.284
36
Abuse
Chapter 13

• False Claims
• Exaggerated Claims
• Opportunistic Claims
• Fraud within the RAF
• Legal Malpractice

37
Policy Issues

• Social Security chapters 15 17 pp.XIX, 373-467
• Common Law Remedies chapter 18 pp.XX, 468 - 503
• Fault vs No-Fault chapters 1920 pp.XXI, 513-584
• Lump Sum Awards vs
• Periodic Payments chapters 2122 pp.XXI, 585-668
• Disability Assessment chapter 23 pp.XXII,
  669-703

38
Policy Shifts

• Liability Insurance Social Security
• Premium Taxation
• Fault No-Fault
• Compensation Benefits
• Lump Sums Pensions
• Unlimited Defined

39
Fault vs No-Fault
Chapter 19

• Vindication and Retribution
• Liability Insurance
• Incentive to Safety
• General Deterrence
• Publicity

• Issues of Proof
• Not Always Human Error
• Standard of Fault
• Contributory Negligence
• Reduction in Compensation
• Exclusion from Compensation
• Complexity and Delay
• Complexity and Cost

40
Lump Sum Compensation vs Periodic Payment of
Benefits
Chapter 21

• Promote Finality
• Independence Dignity of Claimant
• Facilitate New Life Style
• Inheritance for Beneficiaries
• Funding Litigation

• Guesswork and False Prophecies
• Under Compensation
• Over Compensation
• Process of Calculation Increases Cost
• Process of Calculation Causes Delay
• HIV/AIDS
• Utilization of Award