Legislative Changes to the Road Accident Fund Johannesburg Country Club, Auckland Park 12 February 2009

David Harpur Chief Executive: Insurance Institute of SA Welcome

Presentation by Spescom

Jacob Modise Chief Executive: Road Accident Fund Background and Description Of the Changes

Michael Salant Legal Advisor: Marsh How this affects You

AMENDMENTS TO THE ROAD ACCIDENT FUND HOW THIS AFFECTS YOU

POINTS FOR DISCUSSION Summary of adverse changes External environment in which the changes have occurred Consequences of changes Duties of Brokers Opportunities

RESTRICTIVE AMENDMENTS General Damages (Pain, suffering, Loss of Amenities of Life) limited to serious injuries Damages for loss of income capped at R Loss of support claims limited to R for all dependents Medical expenses (other than in emergency situations) are limited to the rates of public health institutions

RESTRICTIVE AMENDMENTS (Continued) COMMON LAW RIGHT TO SUE THE PARTY CAUSING THE LOSS HAS BEEN REMOVED What of foreigners ? Claims against compatriots Claims against South African residents

EXTERNAL ENVIRONMENT VEHICLE POPULATION FOR THE PERIOD BETWEEN 31 MARCH 2007 TO 31 MARCH 2008 The number of registered vehicles has increased from to The total number of vehicles that are un-roadworthy and/or unlicensed has increased by 18,23% On a national basis and over an 8 year period the average number of vehicles per kilometre of road has increased by 36,6% Source: Road Traffic Report March 2008 Compiled by Road traffic Management Corporation

EXTERNAL ENVIRONMENT (Continued) FATALITIES AND INJURIES “Violence and motor vehicle accidents continue to be major causes of death in South Africa” Violence is the major cause of non natural death accounting for 36% of all deaths Transport related deaths account for 32% of all non natural fatalities Source: The 9 th Annual Report of the National Injury Mortality Surveillance System

OVERALL MANNER OF DEATH Non-Transport 28.9% Transport 71.1%

EXTERNAL ENVIRONMENT (Continued) Other Contributing Factors Increased alcohol and substance abuse Deteriorating roads Increase in road rage High Exposure with Limited Legal Rights of Recovery

REGULATORY REALITY Delays in proving claim Access to legal assistance Access to supporting documentation Administrative inefficiencies RAF Deceased Estates Delays in settlement of proven claims

DUTIES OF THE INTERMEDIARY Section 2 of FAIS General Code of Conduct “A provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and integrity of the financial services industry.”

DUTIES OF THE INTERMEDIARY (Continued) Educate the client to enable him to make well informed decisions Analyse needs Identify gaps in cover Propose solutions Deliver

OPPORTUNITIES Exposure and Duties = Opportunities So Leap into action Create awareness Locally International Clients Tourists Establish Solutions Implement in a holistic and integrated manner

INTEGRATED SOLUTIONS (Continued) Short –Term Insurance Group Personal Accident Stated Benefits RAF Specific Schemes Per Motor Vehicle Lift Clubs Employers Private Disability and medical (monitor regulatory developments) Hybrid ? If appropriate and with appropriate skills and competencies

INTEGRATED SOLUTIONS Establish policies in place including Medical Schemes Limits Extent – Do they cater for private care Life and Disability Group Schemes Individual Policies Capital Disability Income Protection

INTEGRATED SOLUTIONS (Continued) In developing solutions be careful not to restrict the cover in a reactive manner to the exclusion of other accidental causes of death or injury as reflected in the statistics to the exclusion of other solutions unless otherwise agreed by your client.

INDUSTRY CONSIDERATION Lobby to reclaim right to institute legal action in excess of the RAF limits The removal of these rights perpetuates an environment of non accountability and if successful introduce compulsory third party liability insurance to cover such exposure Control through annual issue of vehicle licences

Thank you for your time and patience

??? Questions ???

May 2009: FAIS for Dummies – RE1/2, credits, options A look at topical issues affecting the Health Environment – broker commission, legislation Investments in the current economic climate Impact of Climate Change on the Insurance Industry Future Topics

Thank You