Big changes coming to South Africa’s Road Accident Fund – Red flags raised

A new bill that is set to make sweeping changes to South Africa’s petrol-tax-subsidised Road Accident Fund (RAF) is in the pipeline, seeking to alter how the RAF will operate in the future.

The proposed amendments include a complete restructuring of the RAF, moving away from a “compensation” to a “social benefits” structure, akin to the terms and conditions of the formerly-used Road Accident Benefit Scheme, according to law firm Gert Nel Inc Attorneys.

The Department of Transport (DoT) has given the public an opportunity to comment on the proposed bill until 8 October 2023 before continuing with the rollout.

Big changes

The main suggestions detailed in the RAF amendment bill include:

• Replacing victim compensation with structured benefits
• Doing away with general damages, known as “sorry money”

Replacing compensation for road accident victims with structured benefits means they will not receive compensation for actual damages suffered, “but rather a pittance of what the government would consider is owed to them in terms of loss of earnings and/or support (if any),” said attorney Gert Nel.

This would be paid in the form of a monthly annuity, rather than a lump sum like what is currently being done.

Moreover, Nel said that if the government does do away with sorry money payments, it would be infringing on a victim’s constitutional rights.

“A victim is compensated by the suspension of his common law right to claim from the wrongdoer, and guaranteed payment of compensation from a dedicated fuel levy,” said Nel.

“Without a lump sum, a victim would have little or no chance of attaining financial rehabilitation.”

In terms of the draft bill, the RAF would also be indemnified if the vehicle in which the parties to an accident were travelling had public liability insurance.

“This approach will surely impact gravely on the taxi and insurance industry, and interesting comments are sure to follow in this regard,” said Nel.

If passed, the bill would additionally disqualify medical aid schemes from recovering the portion of money they paid on behalf of the victim from the RAF. The viability of this issue is currently being heard by the Constitutional Court.

One seemingly positive proposal is that the bill would now make provision for an RAF adjudicator, which is aimed at reducing litigation, however, it would prevent law firms from pursuing the court prior to the decision of the adjudicator.

Another concern is that foreign nationals will not be able to claim from the RAF if this draft legislation is passed, according to the law firm.

An effort to reign in costs

The amended bill is purportedly an attempt by the RAF to save costs by penalising bad driving.

“The Department of Transport is punting this as a key cost-saving initiative, however, policing and recovering these expenses/liability has historically proved to be a futile exercise,” said Nel.

He raised concerns about the proposal that interest on the amount due to a claimant was only payable more than 120 days after settlement, despite the current act providing for 14 days.

In addition, the bill would allow the electronic lodgement of claims, but the effectiveness of this remains in question “in light of the RAF’s almost impossible requirements [that] have to be met in lodging a claim,” said Nel.

“The proposed amendments do little in the way of mitigating the financial administrative challenges of the RAF, other than just ‘kicking it down the road’,” said Nel.

“What it will do is have an adverse effect on the capacity of victims to regain at least some form of personal integrity and independence in the wake of a traumatic car crash.”