LEGAL AND OPERATIONAL FRAMEWORK
INTRODUCTION
The Road Accident Fund (RAF) is the instrument by which Government compensates victims of motor vehicle accidents for bodily injuries or loss of support suffered following the death of breadwinners.

HISTORICAL BACKGROUND
The RAF is the product of a long history spanning more than fifty years, which commenced with the introduction of compulsory motor vehicle insurance in 1942. The Motor Vehicle Assurance Act 29 of 1942 was the first statute in South Africa, which provided for compulsory insurance to ensure that victims could recover damages, which were caused unlawfully by motor vehicles. The main thrust of the initial legislation was to afford protection to persons not in or on a particular vehicle, i.e. pedestrians. During the sixties it became apparent that certain insurance companies had insufficient income to cover claims. Several companies were liquidated and this lead to the establishment in 1965 of the Motor Vehicle Accident Fund to act as reinsurer of companies which undertook compulsory MVA insurance.
From 1942 to 1986 the legal basis and the funding of the MVA system essentially remained unchanged. With the introduction of the Motor Vehicle Accidents Act 84 of 1986 the method of funding the payment of claims was radically changed. The compulsory insurance system with its statutory annual premiums was abandoned in favour of a levy on fuel sold. The 1986 Act also introduced the agency system in terms of which certain insurance companies acted as agents for the Fund to handle and settle claims. This agency system and funding method through fuel levies were retained in the Multilateral Motor Vehicle Accidents Fund Act 93 of 1989. The purpose of this latter Act was to introduce a uniform system of compensation for road accident victims in the so-called SA TBVC states. The legal basis for compensation payable for bodily injuries sustained and personal losses suffered following road accidents, remained unchanged. The agency system was undesirable and ineffective and was phased out from 1993 to 1997 and now the RAF attends to all claims.

THE LEGAL BASE
The Road Accident Fund Act 56 of 1996 came into operation on 1 May 1997. This act established the present Road Accident Fund whose object it is to pay compensation in accordance with applicable statutes, common law and judicial precedent for personal loss or damage wrongfully caused by the driving of motor vehicles.
The present MVA system indemnifies the driver or owner of a motor vehicle against liability incurred as a result of loss of damage wrongfully caused to another person in road accidents. The RAF only indemnifies the driver or owner to compensate for losses suffered due to bodily injuries sustained or the death of a person, and not also for liabilities which the driver or owner may incur for damage to property (e.g. damages to motor vehicles, personal affects, buildings, luggage or goods conveyed in a vehicle). Common law principles of delict are incorporated in the legislation. Thus during the assessment of claims the respective degrees of fault of the victim and the wrongdoer have to be determined. The victim’s claim is reduced by such own degree of fault or blame for the accident contributing as a cause.

THE CLAIM PROCESS
a) Who may claim?
Any victim who has suffered loss on account of injury sustained in a vehicle accident caused by fault may claim. In addition dependants of a deceased victim may lodge claims for loss of support suffered and recover funeral expenses. Various categories of road users are compensated as victims of road accidents, including drivers, passengers, cyclists and pedestrians.
When a claimant is legally incompetent (e.g. a minor or a person incapable of conducting personal affairs), the parent, legal guardian or curator has to lodge the claim on the victim’s behalf.
Certain claims are excluded: i.e. the injured spouse of the person who caused the accident, an injured member of the household when the head of the household caused the accident, a paying passenger on a motor cycle.

What is paid to victims?
The RAF attends to claims under the following headings:
medical expenses – actual medical costs incurred from date of accident until settlement of the claim for accident-related injuries, and costs of on-going medical care or future medical interventions as the result of accident-related injuries;
loss of income and reduced earning capacity, or in the case of the death of a breadwinner, the loss of support suffered by dependants;
funeral expenses;
general damages – the non-financial loss for pain, suffering, disfigurement and loss of amenities of life.
Except for claims of certain passengers, the RAF’s liability to pay compensation is unlimited, i.e. the RAF is obliged to compensate the victim in the amount of actual damages proven. Claims of certain categories of passengers are limited to R25 000 against their own driver, but claims against other drivers are unlimited.
No compensation is paid to the extent that the claimant or victim contributed to the personal losses or damages, e.g. if the claimant was 30% negligent or to blame, only 70% of the damages will be paid by the RAF.

When must claims be lodged?
Claims must be submitted to the RAF within 3 years (in the case of hit-and-run claims, within 2 years) of the accident. If the matter is not settled, the claimant must issue summons within 5 years of the accident. Outside these periods, the claims prescribe.
Prescription does not run against minors, or legally incompetent persons (mental health patients or persons under curatorship), except in the case of hit-and-run accidents.

Where must claims be lodged?
Claims must be submitted by hand or registered mail to an office of the RAF. Branches of the RAF are situated in Cape Town, Durban, Pretoria Johannesburg and East London.

What is the claims procedure?
The claim is lodged on a prescribed statutory claim form (Form 1), which provides basic information on the claimant, the vehicles and parties involved in the collision, the date and place of accident and the amounts claimed. It also contains a medical report by the treating doctor. This claim form is accompanied by an affidavit setting out the full particulars of the accident, statements of witnesses, police reports, hospital and medical records, as well as vouchers and documents in support of amounts claimed.
The drivers of the vehicles involved in the collision must furnish details of the accident to the RAF on a statutory accident report form (Form 3) together with information of witnesses, which the RAF may request.
Once a claim is submitted, the RAF registers it on its claim system and commences with its investigations. The RAF determines whether the claim is valid (i.e. was there a road accident, does the completed form comply with statutory provisions, was it submitted in time, etc.) and what the merits of the case are (i.e. the degree of fault, blame or negligence to be ascribed to the drivers of the vehicles and the claimant respectively). The quantum is also determined (i.e. the amount of the damages or losses suffered).
If a claim is incomplete, the RAF calls for additional information and supporting documentation to enable it to better assess the (merits) issue of fault and (quantum) the amount payable.
Problems in the current claims system
There are nine major problematical areas in the current compensation delivery system:
High Accident Rate (see par 9 below)
Regrettably South Africa is a world leader in the business of road carnage with over 500 000 accidents per annum involving some 10 000 deaths. For the RAF the result is an ever increasing volume of claims at an ever increasing value of enormous proportions. See the tables in paragraph 6.
Growing Deficit
The RAF has been under-funded for many years. The RAF’s deficit doubles every 3 to 5 years. Further details of the RAF’s financial position are contained in paragraphs 7 and 8 below.
Passenger Claims
In terms of present legislation the compensation of certain passengers involved in single vehicle accidents is limited to R25 000,00, and in some cases general damages are excluded. This is anomalous and inherently unfair.
High Settlement Costs
Settlement costs represent the costs involved in proving and agreeing the entitlement to, and the amount, of the compensation. Such costs are paid to professional experts such as attorneys, advocates, medical doctors and medical service providers, accident investigators and actuaries to assist claimants, the RAF and the Courts to determine the merits and quantum of cases.
The table at page 10 reveals that costs of delivery is the second biggest item of expenditure. Note that this does not include what claimants pay to their attorneys as attorney and client costs or under contingency fee arrangements.
Settlement Delays
The situation that the present Fund inherited is that on average claims and supporting evidence were submitted to the RAF about 18 months after the accident, and often almost 36 months or longer after the accident. Once claims are submitted, the RAF must assess the validity, merits and quantum referred in paragraph 4. On average most claims were settled and paid out 2,8 to 3,8 years after the accident. Management remains challenged to address this situation.
Stratagems include making the Fund both more visible and more accessible.
General Damages
The RAF pays damages for pain, suffering, disfigurement and loss of amenities of life. This is a financial consolation for a non-financial loss. Of concern is that judicial awards have escalated the maximum payable under this head of claim from some R200 000 to R850 000 in a situation where general damages already presents as the biggest item of annual expenditure. See table on page 10.
In addition the Fund is required to pay general damages in advance, i.e., before they have actually been suffered. An example is that the Fund pays for all future pain and suffering even though the victim may not actually suffer such pain on account of intervention such as untimely death.
Suppliers claims
Medical suppliers of services to accident victims are entitled to claim their costs and fees directly from the Fund. Over the past two years the incidence of such claims has increased by over 400% placing an enormous burden on the Fund and stretching resources to extreme limits.
Cash Incentive – Fraud
Because general damages and loss of earnings are largely paid as cash lump sums the system is inherently susceptible to deviance ranging from inflated claims to false and fraudulent claims.
Medical Management
As the Fund is primarily concerned to address the needs of injured victims of road accidents reactively it requires legislative and operational capacity, which it does not possess at present. The present proactive operational mode is defective in that the Fund has no control over the nature, duration and cost of treatment. In the result issues of over servicing, overcharging and inappropriate treatment present has highly problematical.

THE PAYMENT OF CLAIMS AND CLAIMS STATISTICS
The amounts paid towards compensation and settlement costs on claims for claimants and the RAF are reflected in the following table:

Claims flow:
The following table reflects the number of claims received and settled by the RAF during the
following financial years:

HIGH ACCIDENT RATE AND ROAD SAFETY
Compared with international norms South Africa has an exceptionally high road accident rate. In the first draft White Paper on the MMF published in June 1996, statistics were published on 1992 fatality rates, comparing South Africa with other countries: