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MASERU — A local consumer rights organisation wants the government to strip the Lesotho National Insurance Company (LNIC) of its 23-year-old monopoly of managing the Road Traffic Accident Fund. The Consumer Protection Association (CPA) suggests that the government should establish its own “Road Accident Fund rather than giving a private company the monopoly to operate the fund”. The LNIC is supposed to pay third-party insurance to road accident victims. Potential beneficiaries of this compensation are passengers and people knocked down by vehicles.
Other potential beneficiaries include people injured in accidents in which the driver is at fault. The maximum claim for road accident victims is M12 000. The money to pay victims comes from a tax levied on fuel sales in Lesotho.
The government has appointed LNIC as the fund operators. But the CPA says the government should establish its own fund rather than relying on the one managed by the LNIC.
“The fund will put compensation of complainants at the centre of its business rather than profit maximisation,” says the CPA in a proposal document it has been using to mobilise stakeholders to support its case against the LNIC’s monopoly. CPA director, Lehlohonolo Chefa (below), told the Sunday Express that the association also wants the insurance company to account for every cent it has received from the government in the past 23 years. “We would like to see an audit of how many people have been compensated by the company since 1989 and the profit margins of the company as well as the cost of paying expensive lawyers in order to protect its profit maximising motive,” Chefa said.
“We feel justified to seek a rethinking more so when LNIC is using the resources which it accumulates with minimal effort as the Central Bank is collecting the levies on its behalf”.
The CPA says it has found that even those who have successfully claimed compensation do not get paid. It complains that the LNIC demands that claimants subject themselves to expensive medical examinations. The problem, the association says, is that after paying huge fees for the medical examinations the victims can only get a maximum M12 000.
Sometimes claimants have to engage the services of expensive lawyers or third-party claim experts to push their claims. “There is a possibility of a lot of money being lost in legal fees or claimants being cheated by either their lawyers or the insurer,” the CPA said in its proposal. The LNIC also wants to establish if the driver was at fault before it compensates the victims. Investigating accidents for purpose of claiming compensation from the insurer is sometimes so expensive that most victims opt to drop their claims.
Lawyers that try to represent poor claimants can find themselves in trouble. Take the case of local lawyer, ’Mathabo McCloy, for example. Four years ago McCloy tried to fight for dozens of accident victims after the LNIC refused to pay them but she got her fingers burnt. When LNIC refused to pay McCloy’s clients sued her for damages. Interestingly her clients were represented by Webber Newdigate, the same firm that LNIC had used to block McCloy’s clients from getting compensated. She lost the case and the High Court sheriff attached her property.
LNIC had declined to pay her clients saying their claims had delayed while McCloy’s clients complained that the insurer had sat on the claims until they expired. LNIC had said whoever was dissatisfied could go to courts.
McCloy had argued that her clients were too poor to challenge the LNIC in court. Her attempts to get government to intervene in the dispute failed. The Directorate on Corruption and Economic Offences (DCEO) declined to investigate the matter on the basis that it did not fall within its scope of work. McCloy had told the DCEO in her 2007 letter that she suspected that the Motor Vehicle Insurance Order of 1989 was being misused to benefit the LNIC. “We have reason to believe that the administration of this order is practised in the most corrupt and unfair manner which warrants your intervention to avoid more suffering to those it affects,” McCloy said in the letter. McCloy said the LNIC wrongfully declined to pay or settle 250 claims of her clients “under the cover of a legal technicality”.
She claimed that the LNIC received all the necessary information on time but “deliberately withheld settlement till prescription date”. McCloy wanted the DCEO to investigate allegations that Webber Newdigate was helping LNIC to avoid paying compensation to third-party motor vehicle accident victims. She requested an audit of amounts the insurance company had paid Webber Newdigate. “What were they paid for? Could it be for having saved LNIC money?” McCloy wrote. “We see no reason why only Webber and LNIC should benefit from the fund in cases where they have not performed their duty as expected or as prescribed by the relevant law, while the injured persons get no compensation at all.”
McCloy complained that LNIC left the claims to expire and alleged that summons should have been issued earlier before the expiry date as prescribed by the law. “This is most unreasonable since this law was passed to make settlement of claims easier without having to resort to courts unless it is necessary,” she said. “It is most unfair bearing in mind the fact that going to court requires money. “Most claimants cannot afford this expense while LNIC have a huge fund at their disposal from which their legal representatives are paid for every step they take, every letter they write and every court appearance. “In this circumstance why can’t victims of motor vehicle accidents draw from the same fund to defend? “How else can they afford to go to court?” McCloy said in some cases summons were issued to stay claims’ expiry dates but victims could not afford to pay further fees to continue their cases, Webber Newdigate sued them for cost of suit.
“If your investigations should reveal that LNIC and Webber have been acting properly, fairly, justly, in good faith and in compliance with the law and with the best interests of motor vehicle victims, then it would mean the law itself is not just,” McCloy added. The audit was never done. LNIC officials could not be reached for a comment at the time of going to print.