Issued by: SA Communication Service
PRESS STATEMENT ON THE RELEASE OF A DRAFT WHITE PAPER ON THE MULTILATERAL MOTOR VEHICLE ACCIDENT FUND, BY MINISTER MAC MAHARAJ
31 May 1996
1. The MMF is an insurance fund of the state which receives it premiums through a tax based on a percentage of the fuel levy, currently 9c on a litre of petrol and 5.9c on diesel, and pays benefits to road accident victims.
2. It currently has a fairly complex system of operating. Substantial resources, both financial and human, are utlised in peripheral activity which does not directly benefit the victims. It discriminates within its current legal framework against certain passengers by placing a limit of R25 000 on their claims and equally important carries a contingent liability for claims incurred but not settled of approximately R5bn.
3. This draft White Paper is an attempt to address these problems in a cohesive way and promote three key objectives of the MMF more effectively: providing an affordable set of benefits which adequately compensate road accident victims: to do this in a way which ensures that the maximum resources flow directly to the victim; and thirdly to make the system for claiming these benefits as equitable and accessible as possible.
4. The key proposals contained in this Draft White Paper are the following:
a. Far too much money is currently spent in the current system, apportioning blame for an accident - since the benefits are related to the extent of responsibility. We suggest a move to a "No Fault" system - which removes expenses that reduce real benefit to the victims and makes the process easier.
A sub-set of this proposal includes the provision of initial acute medical treatment without an aggregate limit which will be available for the first 18 months after the accident at rates of the Compensation Commissioner.
b. The cap on benefits to certain passengers, which impacts most on users of public transport, is to be removed and they will have the same set of benefits as others.
c. The above proposals will benefit large numbers of victims and results in an increased cost to the state. To address the financial constraints of the MMF, we have chosen a path which promotes an affordable increase in its income and a lowering of expenditure by capping certain benefits. The Income increase is to be based on a 9% a year increase in the fuel levy - this is in nominal and not real terms - and assumes a starting level of 12c a litre.
d. Expenditure is reduced by placing a limited cap on medical expenses for permanent impairment - the cap will not exclude any reasonable costs likely to be incurred after the initial 18 month period. There is also a cap on lost income up to R2500 a month or loss of support up to R1875 a month.
These caps must be understood in the context that they will result in a maximum limit of close to R2m per claimant. Our current experience is that 63% of all claims are less than R10 000 (and make up about 9% of expenditure), a further 28% are less than R50 000 (cumulatively these 91% of claims account for approximately 34% of expenditure), and more importantly 99,5% of claims are less than R500 000. The last 0,5% of claims account for approximately 18% of expenditure.
The result of these caps will not negatively impact on the overwhelming majority of victims.
Clearly people who would like to be insured for more than the levels of benefit we are proposing will need to insure them- selves, as many people already do.
e. The final reduction in expenditure relates to the removal of benefits relating to general damages - these are generally related to issues like pain and suffering - and are financial benefits for non-financial losses.
5. This package of proposals will ensure more benefits flow directly to all victims, will remove the current distinction against certain passengers, will allow for more effective administration of the benefits and bring the fund to financial stability with its contingent liabilities covered by the year 2007.
6. These proposals are open for comments and feedback from the public. We have asked for comments to be directed to the am sure the Portfolio Committee on Transport in the National Assembly will also host discussions on the proposals. We plan to review the inputs and feedback and finalise the White Paper along with Draft Legislation based on the White Paper in September 1996. The "new" MMF I hope will be in operation by 1 May 1997.
Enquiries: Ketso Gordhan Tel 012-290-2001