MVA Fund relaxes its rules

THE Motor Vehicle Accident Fund (MVA) is to receive a complete overhaul through a new law which will replace the existing one.

In future, victims of a car accident will not have to prove that it was anyone’s fault. Up until now, passengers in the car of a driver who caused an accident were excluded from claiming compensation from the MVA.Under the new law they will receive compensation.The MVA will be relocated from the Finance Ministry to that of Works, Transport and Communication.Introducing the new bill in Parliament yesterday, Finance Minister Saara Kuugongelwa-Amadhila said that about 90 per cent of accident victims were from the lower socio-economic sector of society.Most accident victims were passengers and pedestrians, she said.Under the present law, an accident victim has to prove that the driver or owner of a vehicle was at fault and establish the value of the damage.A third hurdle is that a court of law usually determines the amount of damage to be paid out.”As a result, the system is plagued with disputes about money and courts are inundated with suits against the MVA,” the Minister said.”In addition, the system experienced the onset of systematic deviance and fraud on account of a money-oriented culture.”It was considered manifestly unjust that innocent victims of accidents were excluded.Removing the ‘fault factor’ would enable the approximately 33 per cent of victims presently excluded to receive payment.Under the new bill, victims will be paid up to N$1,5 million compared to the present N$380 000 cover value, Kuugongelwa-Amadhila told the National Assembly.In future, income loss support payments will go up to N$100 000 a year to reimburse a victim for income lost through an accident or support lost in the case of the death of a breadwinner.Another addition in the new draft is a funeral grant of N$7 000.”The advantage of this model is that the MVA is able to effectively and immediately provide a meaningful benefit to bereaved families,” the Minister added.However, accident benefits will be different for taxpayers and non-taxpayers.Payments will not exceed N$100 000 to ensure that people are not compensated at a level that actually exceeds the loss suffered.”Where tax is not paid, compensation accrues up to the amount set as the tax threshold, being the amount at which a person is then required to pay income tax,” the Minister said.People earning more than N$100 000 a year would experience a shortfall between the compensation awarded in the case of an accident and their actual loss.”But it is not possible to guarantee full compensation for all losses suffered,” according to Kuugongelwa-Amadhila.”There is simply no system in the world that does that.A state benefit system cannot be expected to guarantee more than necessary.Higher earners can top up their personal accident and liability insurance.”The MVA would in future fall under administrative law, allowing a court to only intervene if it concludes that the MVA has acted with gross unreasonableness.Under the old MVA Act of 2004, it was usually easy for a claimant to sue the MVA, as the Fund had to pay the legal costs should a court find that it wronged just slightly.”Experience also shows that the Fund is at a huge risk and stands to lose most cases,” the Minister concluded.Debate on the bill will start next week.Up until now, passengers in the car of a driver who caused an accident were excluded from claiming compensation from the MVA.Under the new law they will receive compensation.The MVA will be relocated from the Finance Ministry to that of Works, Transport and Communication.Introducing the new bill in Parliament yesterday, Finance Minister Saara Kuugongelwa-Amadhila said that about 90 per cent of accident victims were from the lower socio-economic sector of society. Most accident victims were passengers and pedestrians, she said.Under the present law, an accident victim has to prove that the driver or owner of a vehicle was at fault and establish the value of the damage.A third hurdle is that a court of law usually determines the amount of damage to be paid out.”As a result, the system is plagued with disputes about money and courts are inundated with suits against the MVA,” the Minister said.”In addition, the system experienced the onset of systematic deviance and fraud on account of a money-oriented culture.”It was considered manifestly unjust that innocent victims of accidents were excluded.Removing the ‘fault factor’ would enable the approximately 33 per cent of victims presently excluded to receive payment.Under the new bill, victims will be paid up to N$1,5 million compared to the present N$380 000 cover value, Kuugongelwa-Amadhila told the National Assembly.In future, income loss support payments will go up to N$100 000 a year to reimburse a victim for income lost through an accident or support lost in the case of the death of a breadwinner.Another addition in the new draft is a funeral grant of N$7 000.”The advantage of this model is that the MVA is able to effectively and immediately provide a meaningful benefit to bereaved families,” the Minister added.However, accident benefits will be different for taxpayers and non-taxpayers.Payments will not exceed N$100 000 to ensure that people are not compensated at a level that actually exceeds the loss suffered.”Where tax is not paid, compensation accrues up to the amount set as the tax threshold, being the amount at which a person is then required to pay income tax,” the Minister said.People earning more than N$100 000 a year would experience a shortfall between the compensation awarded in the case of an accident and their actual loss.”But it is not possible to guarantee full compensation for all losses suffered,” according to Kuugongelwa-Amadhila.”There is simply no system in the world that does that.A state benefit system cannot be expected to guarantee more than necessary.Higher earners can top up their personal accident and liability insurance.”The MVA would in future fall under administrative law, allowing a court to only intervene if it concludes that the MVA has acted with gross unreasonableness.Under the old MVA Act of 2004, it was usually easy for a claimant to sue the MVA, as the Fund had to pay the legal costs should a court find that it wronged just slightly.”Experience also shows that the Fund is at a huge risk and stands to lose most cases,” the Minister concluded.Debate on the bill will start next week.