MVA Fund targets solvency by 2017
Deficit now only N$277 million
The MVA Fund plans to become solvent by the year 2017 according to a new five-year strategic plan which becomes operational next month.
The new strategy, which was approved by the MVA Fund board in December and signed by the line minister in January, will replace another five-year turn-around strategy which was due to end in 2016.
The 2011 turn-around strategy has been credited with improving the fund’s financial fortunes in the last three years. According to CEO Rosalia Martins-Hausiku, the fund’s finances have seen drastic improvements from a deficit of N$542 million in 2012 to N$277 million as at January 2014.
As part of the new strategy which becomes operational from 01 April 2014 to 31 March 2019,
the MVA Fund is seeking to achieve financial independence through eliminating its historical deficit.
Martins-Hausiku said this will be achieved by keeping the 47.7 cents fuel levy constant and through pursuing two additional sources of revenue.
These additional sources of funding are contained in a draft amendment bill of the MVA Fund Act of 2007 recently submitted to the Minister of Works and Transport. The amendments will see the introduction of surcharges on the annual registration of vehicles in the country and on foreign registered vehicles entering Namibia.
The amendments will also see the removal of the injury grant blamed for fraudulent claims.
“The injury grant may be considered as one of the reasons that induces people to inflate claims or exaggerate injuries as has been the case in some instances.
With its removal this will enhance the seamless administration of our claims process which is geared towards a complete ‘ no fault’ system that focuses on rehabilitation.
“Priority is being placed on rehabilitation of the injured and to get them back to work and school and independence.
This will have a direct positive impact on our medical and hospital costs, currently the highest cost drivers at the fund. Our sister funds in New Zealand and Australia have realized that by treating and rehabilitating people in the shortest possible time, lesser resources are spent on protracted medical treatment and people can return to work, which will also impact our Loss of Income payouts positively.
Interestingly, the new amendments contain proposals for the abolition of limitations and exclusions currently applicable on passengers traveling at the back of pickups, without seat belts or overloaded vehicles.
The MVA Fund said it wants to move to a new “no fault based” system.
Under the current system, accident victims are compensated according to their level of culpability.
The more the contribution, the lesser the compensation the victim receives, but Martins-Hausiku said this system will go away completely under the proposed amendments.
“This may sound as contradicting our road safety focus, however, our experience over the years has shown that we are penalizing the innocent parties – the passengers who are amongst the vulnerable road users,” she said.
Martins-Hausiku said the fund is mindful of the challenges to its ambition of becoming solvent. Major challenges include the ever-increasing crash rate and their resultant severe injuries, which drives the fund’s medical and hospital costs. “The new trend which is a cause for concern, is the increase in the number of truck-related crashes, where one single crash claims an average of five lives.
This situation needs to be arrested immediately. We are working with the National Road Safety Council and other role players to improve this trend especially on the B1 road.
“Other challenges are shortages in emergency response services, be it personnel or ambulances, which in many cases delay treatment being administered at the most appropriate and in the shortest possible time.”