OWN CORRESPONDENT, Cape Town | Wednesday
A TOP official at South Africas Road Accident Fund, which has a deficit of R9.2bn, has launched a stinging attack on the politicians, unscrupulous lawyers and excessive administration expenditure he says are responsible for driving the fund to the brink of bankruptcy.
The funds Duif de Waal, a re-appointed retired actuary, told Afrikaans daily Beeld that if the current trend continues unabated, the fund’s budget deficit could amount to R177bn by 2011.
De Waal slammed the current system, which he said was costing the country a fortune because of the lawyer-driven dispute settlement process.
In 1987, only 31% of accidents saw claims instituted. These days in 75% of accidents, even if it is just a finger that was cut, claims are submitted, of which dozens are false,” De Waal told Beeld.
“Of the funds R2.2bn expenditure in the current financial year, 48% was for administration. The fund is therefore the most ineffective ‘insurance company’ in the world. Ordinary insurance companies spend, at the most, 12% on administration. Therefore, something is very wrong, De Waal told Beeld.
“Other insurers won’t even consider or develop products that involve lawyers and courts to settle claims.
De Waal told Beeld that the only way to change the balance was by “fewer claims and greater effectiveness. Other countries in the same situation, managed to correct the situation within five years. If the government spends R1.1 billion of the R2.2 billion outlay on traffic issues and law enforcement, the same can be achieved.”
De Waal said lawyers often waited until the last moment of the three-year deadline to submit claims. This is called ‘churning files’ and they generate legal fees during this time.
“The drop in claims over the past year, compared to the previous year, indicates a turning point and that we are doing something right.”
Dullah Omar, the Minister of Transport, who launched a new range of South African road signs this week, said his ministry did not have sleepless nights about the survival of the Road Accident Fund, because the Satchwell commission has been appointed to investigate the problems that De Waal highlighted.
This commission, under the chairmanship of Judge Kathleen Satchwell, must submit its findings to the government, said Beeld.
“The fund shortage has always been there and we are looking for solutions,” Omar said.