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The RAF in Crisis: Where To From Here?

The RAF in Crisis: Where To From Here?
April 24, 2017 gnuworld
road accident fund in crisis

In February this year, the Road Accident Fund (RAF) released a statement that all payments to creditors from the Fund have come to a standstill, due to its bank account being attached by the Sheriff of the Court.

With the Fund receiving over 1 000 warrants of execution on a monthly basis and over 3 000 warrants still queued for payment, the attachment, removal and sale of RAF assets has now become an unfortunate reality.

Note that despite the current state of the RAF, DSC Attorneys is continuing to – and will continue to – represent its clients with road accident claims, to ensure they receive the compensation they deserve.

The current state of the RAF

For the past three years, the RAF has continued to struggle with serious cash constraints.

Despite using its entire fuel levy income of approximately R3 billion to make over 30 000 payments to claimants each month, there’s still an outstanding balance of R8,2 billion due to 5 200 creditors.

What is the RABS?

The Road Accident Benefit Scheme (RABS) Bill is presently before parliament. It provides for a radical overhaul of the current system of compensation. However, the proposed new system is riddled with problems and is unlikely to be implemented without further, substantial revision.

RAF versus RABS

The proposed RABS system provides for a new “no-fault” benefit scheme, so payouts will no longer depend on establishing who was at fault, or to what extent, in causing motor vehicle accidents.

This means more accident victims will qualify for benefits – but the catch is that those benefits are likely to be drastically reduced.

It’s estimated that the scheme could receive twice as many claims as the RAF. With the RAF already struggling with serious administrative mismanagement and payment backlogs, one has to wonder how RABS could in fact remain solvent.

What’s more, if the new scheme receives the predicted volume of claims, it will need to employ a large administrative workforce and its own medical staff, and open branches in every town and city in the country – making it a far more expensive system than the RAF.

A further significant change is that accident victims who qualify for compensation will no longer receive lump-sum payments. Instead, they’ll receive a structured monthly benefit. Once specific conditions occur, the monthly payments will cease. For example, payments will be stopped once a beneficiary returns to work; once a beneficiary or dependants have claimed benefits for 15 years; or once minor dependants reach the age of 18.

For accident victims, this is likely to involve a loss of long-term security. Their medical treatment and support needs may last for the rest of their lives, but their monthly benefits may be stopped after 15 years.

Unlike the RAF, the proposed RABS scheme will not provide compensation for general damages for pain and suffering. It also won’t give consideration to an accident victim’s future earning potential when determining the compensation due.

Children and students will be regarded as unemployed, meaning that they will receive benefits based only on the annual national income average of R44 000, regardless of what they would have been capable of earning once qualified.

Certain proposed changes to the claims process are also worrisome. Under the new system, road accident victims will not be permitted to claim within the first 60 days after an accident. After individuals lodge claims, they will have to wait up to an additional 180 days for a response.

If no response is received within that period, claimants must then assume that their claims have been rejected and will have only 30 days in which to submit a written appeal to the scheme administrator.

RABS and the role of attorneys

RABS is designed to exclude attorneys from the claims process. Under the system that’s currently proposed, claimants are expected to prepare, lodge and defend their own claims, at their own cost.

Shockingly, RABS administrators won’t be legally obligated to assist victims with their claims either.

The scheme won’t be held liable for any financial losses suffered by claimants due to negligence or recklessness on the part of RABS employees.

All disputes under the proposed RABS will be overseen by an internal tribunal, consisting solely of officers of the scheme administration. Essentially, this involves expecting RABS to defend claims against itself. Where a claimant is dissatisfied with the outcome, the matter may be referred to a court – but this decision will be left up to the RABS administrators.

If introduced, RABS will continue to administer claims that arose under the RAF scheme, and attorneys will continue to play a significant role in respect of those claims.

Road accident claims and DSC Attorneys

At DSC Attorneys, we specialise in road accident claims and are uniquely qualified to secure the best possible settlements on behalf of our clients.

A number of our attorneys previously served as panel attorneys for the Road Accident Fund and one of our firm’s directors, Kirstie Haslam, has been actively involved in parliamentary debate surrounding the proposed new RABS system.

The current situation with the RAF and certain aspects of the proposed new system are cause for concern.

However, rest assured that our attorneys will be continuing to defend the rights of road accident victims and their families, and to work in their best interests. Contact us for expert legal assistance – we work on a “no win, no fee” basis.

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