unfair new Road Accident Fund bill

Critics slam government’s ‘unfair’ new Road Accident Fund bill

24 August 2019 – Originally posted on iol.co.za

unfair new Road Accident Fund bill

Imagine you lose a limb in a car accident, or you are left brain-damaged, can never work again and the maximum benefit you can claim from the RAF is only R280 000 per annum? Picture: Dumisani Dube/African News Agency (ANA) Archives

 

Cape Town – Imagine you lose a limb in a car accident, or you are left brain-damaged, can never work again and the maximum benefit you can claim from the Road Accident Fund (RAF) is only R280 000 per annum?

Even this amount is not guaranteed, this may be the reality for many South Africans if a draft bill on the new workings and name change to the RAF is passed by Parliament. Personal injury lawyers are spitting fire and claim the move is an attempt by the government to get its hands on the estimated R40billion that the RAF collects annually from the fuel levy.

The proposed legislation will soon be discussed in the National Assembly and claims by several attorneys were strengthened this week when President Cyril Ramaphosa announced that the government plans to use money from the Government Employees Pension Fund to stock up its empty coffers.

Weekend Argus spoke to personal injury lawyers who are in agreement that there is “no thinking” behind many of the proposed changes.

Under the proposed legislation, the RAF will become the Road Accident Benefit Scheme and payouts will be capped at R280 000 per annum. People who are involved in car accidents would no longer be able to claim against the guilty parties and guilty motorists would get the same benefits as innocent victims.

Benefits would only be paid to persons between the ages of 18 to 60 years. If you are unemployed or unable to prove an income, your claim will be limited to the Annual Average National Income, currently R52 000 per year, (R4333 per month, which is subject to 25% personal income tax). This applies to students about to embark on a career and/or children when they reach the age of 18, regardless of the value of the real earning capacity destroyed.

For those able to prove an income, benefits will be paid based on after tax income. Loss of earnings is capped at Pre-Accident Annual Income, to be determined by the minister, but presumed to be in the region of R168 000, (R14 000 per month, less 25% tax).

Attorney, Anthony Batchelor, said claims by the RAF that it’s bankrupt is “absolute nonsense”.

“The government wants to get its hands on the funds. It’s the same with the Workman’s Compensation Fund; it’s inept, nobody touches it. The man in the street has a zero chance of fighting this. They (government) will use it to bail out entities like SAA and Eskom,” said Batchelor.

He added that while motorists will continue to pay fuel levies, they will not see the benefits of that levy. Batchelor said the Association for the Protection of Road Accident Victims, comprised of politicians, actuaries, doctors and advocates, challenged the draft proposal and will continue to do so when it comes up for discussion in the National Assembly.

Former head of the Cape Chamber of Commerce and attorney, Janine Myburgh, said she is disturbed by the fact that victims and guilty parties will enjoy the same rights.

“Anthony (Batchelor) is correct. The big thing to punt is the drunk driver and the innocent widow or child are both compensated on the same basis. This is what no fault means.

“In fact, a drunk driver who is employed and drives onto a pavement and seriously injures a child will get a great deal more as the driver’s income is capped at R168 000 per annum and the child at R52 000,” she said.

Specialist personal injury lawyer, Henry Shields, who has 42 years experience as an attorney and 25 years as a personal injury lawyer, said the RAF has been “dysfunctional” since the days when former minister, Mac Maharaj, was at the helm of the Department of Transport in 1994.

“He knew nothing about transport. The government saw a massive fund and thought, let’s get our hands on it. This is purely political,” he said.

Shields went as far as to say that the government was “destroying the system completely”.

“This is too much money for them (government) to ignore, especially if you are in the business of corruption. … You must remember that RAF employers are offered bonuses if they save money, not spend money,” said Shields.

At the time of publication, the Transport Department did not respond to queries from Weekend Argus.

Weekend Argus

 

 

compensation for road accidents

No-fault system and compensation for road accidents

21 May 2019 – On International Law Office

Israel has a no-fault system for road accident compensation established by the Road Accident Victims Compensation Law 1975. According to the law, a person injured in a road accident is entitled to compensation regardless of the question of fault and there is no need to prove the liability of the person who caused the accident.

Compulsory insurance policy

According to the Road Accident Victims Compensation Law, drivers must have a valid insurance policy that covers all bodily injuries, including to the drivers themselves. Violation of this requirement is a criminal offence.

This mandatory insurance system ensures that drivers, passengers and any third parties receive compensation when injured in a road accident. Further, mandatory insurance also provides compensation to pedestrians who may have been hit and injured by an insured motor vehicle.

Compulsory insurance does not apply if:

  • the accident was caused deliberately;
  • the injured driver stole the vehicle;
  • the vehicle was used for perpetrating a criminal offence; or
  • no valid insurance policy was in force.

The remedy to the so-called ‘innocent injured’ in such cases is met by a special fund called the Karnit.

Limited compensation

The Road Accident Victims Compensation Law limits the amount of compensation provided to injured parties in road accidents as follows:

  • Compensation is capped at triple the average wage in Israel when calculating the loss of earnings caused as a result of the accident.
  • Compensation is limited for non-monetary compensation (eg, pain and suffering).
  • The limitation represents the other side of the no-fault system. On the one hand, injured parties are entitled to compensation, on the other, compensation is limited.

Exclusive cause of action

Claims for compensation as a result of road accidents are limited to claims under the Road Accident Victims Compensation Law and injured parties are prohibited from filing a claim under the General Tort Law.

Policy wording

To ensure that the potential exposure created by the Road Accident Victims Compensation Law is fully covered, the insurance regulator dictates the wording of the corresponding insurance policies.

Subject to stringent limitations provided by the law, injured parties are entitled to receive full compensation based on the principles of the General Tort Law, but it is capped as specified above. Consequently, compensation under the Road Accident Compensation Law is lower than what injured parties might have received in a claim under the General Tort Law.

Financial Market Authority (Insurance) comptroller

The legislature has authorised the Financial Market Authority (Insurance) comptroller to check insurance tariffs and the terms and conditions of insurance according to the dictated policy wording.

In addition, the legislature has prohibited insurers from limiting compulsory insurance coverage based on:

  • age;
  • driving experience;
  • mental or physical conditions;
  • the condition of a motor vehicle; or
  • the number of passengers.

Insurance pool

In order to provide coverage to parties that insurers do not want to insure, the legislature established an insurance pool which must insure drivers who have failed to obtain a compulsory insurance policy with another insurer (eg, motorbike riders).

Motor vehicle reform 2006

In 2006 the motor vehicle insurance market was reformed based on the risk exposure of different vehicles. As a result, higher premiums were imposed on owners of two-wheeled vehicles. Strong objections were raised and people refused to purchase insurance coverage. The legislature was forced to intervene and determine that in accidents involving two-wheeled vehicles and motor vehicles, motor vehicle insurers must pay insurers of two-wheeled vehicles 75% of the compensation to which a driver was entitled. This solution created a balance between insurers which insure profitable vehicles and those that do not. The outcome was a reduction in premiums for drivers of two-wheeled vehicles.

Karnit

In order to provide coverage for innocent parties injured as a result of accidents involving uninsured parties, the Road Accident Victims Compensation Law established a special fund called the Karnit.

The Karnit compensates persons injured:

  • following hit-and-run accidents;
  • by stolen vehicles;
  • by a vehicle that was not insured under the compulsory insurance system; or
  • by a vehicle insured by an insurer which is in liquidation.

In order to fund the Karnit, the Road Accident Victims Compensation Law stipulates that a certain percentage of premiums collected by commercial insurers which provide compulsory vehicle insurance should be transferred to the Karnit according to the percentage of shares that the insurer has in the compulsory insurance market.

Development of precedent

Several questions have arisen regarding the interpretation of the Road Accident Victims Compensation Law. In particular, the question of what constitutes a road accident and who is entitled to secondary damages have been examined and answered in various court precedents.

The Road Accident Fund South Africa (RAF)

What is the Road Accident Fund (RAF) of South Africa?

Road Accident Fund South AfricaThe Road Accident Fund of South Africa, or RAF, is a Government compensation fund, financed by the South African public via a fuel levy.  The objective of the RAF is to provide the widest possible cover for injured road accident victims and/or their families in case of death.

The RAF provides indemnity insurance to the negligent “insured driver” and ensures that the injured victim and or families of fatally injured victims are not left with having to run the risk of having to sue a “man of straw” not receiving any compensation in case of serious injury or death.

The RAF Act 96 of 1996 (as ammended) ensures full compensation for accident-related injury or loss to victims of motor vehicle accidents and their families.

The Fuel Levy

The primary source of income for the RAF is the fuel levy.

Currently with every litre of fuel or petrol bought R 1,94 is contributed to the RAF to ensure financial viability.

How do you qualify to claim from the Road Accident Fund?

If you are a driver, passenger, pedestrian, cyclist or motorcyclist involved in an accident which was not entirely your fault, you can claim from the RAF provided that you qualify as being “seriously injured” as required in terms of the Act.

The RAF caters for the following categories of road users / ralatives of road users:

  • If you were injured as the driver of a vehicle and were not solely responsible for the accident (there has to be another party “insured driver/owner” involved);
  • According to recent case law if you were the driver of a vehicle but not the owner of the vehicle, and the accident was a result of the owner’s negligence (such as not replacing the worn brake pads) the owner could be regarded as an “insured owner” for failure of duty of care;
  • If you were a pedestrian, cyclist or motorcyclist and not the sole cause of the accident;
  • If you are a child or spouse who was dependent on the income of the person killed in an accident;
  • If you are a close relative of the deceased and paid for the funeral.

Find out more about the RAF claim process: https://www.gertnelincattorneys.co.za/raf-claim-process/

Different heads of damages that you can claim from the RAF

You can claim for the following from the RAF:

  • medical expenses that result from a motor vehicle accident
  • funeral expenses in the case of a death caused by an accident
  • general damages for pain and suffering as a result of a serious injury, have lost an unborn child or have sustained serious disfigurement, mental impairment or the loss of a bodily function
  • lost earnings, if you were unable to work as a result of an accident
  • loss of support, if a household’s main income provider was killed in a road accident caused by someone else.

To get more information on how Gert Nel Incorporated Attorneys can help you, read: https://www.gertnelincattorneys.co.za/services/road-accident-fund-claims/

Related posts:

Road Accident Benefit Scheme a setback for crash victims?

Road Accident Benefit Scheme a setback for crash victimsJohannesburg – Picture the scenario: a drunk, unemployed driver skips a traffic light, smashes into a car, kills the breadwinner and severely injures the family. Under the current Road Accident Fund, only the crash victims are able to lodge a claim against the scheme. They are likely to receive lump sum compensation, factoring in career path and inflation, will be paid out for lost earnings, medical costs, funeral expenses, general damages and more.Under the proposed, no-fault Road Accident Benefit Scheme, it doesn’t matter who caused the crash because anybody can claim, say critics. So, the victims might receive little or no payout, while the drunk driver immediately qualifies for medical treatment, rehabilitation and an income based on the average annual national income. The breadwinner, who might earn above the statutory cap of about R248 000 a year and has medical aid cover for the family, will receive no benefits, despite fuel tax contributions, and the family has no legal recourse.

That could be me. Or you.

The DA, academics and lawyers have called RABS a setback for crash victims, which will double the administrative load, cost significantly more and could incentivise desperate people to be injured so they can claim from the fund. And consumers need to pay attention because the bill is being fast-tracked through Parliament, where it’s been debated over the past four weeks.

Non-employment benefits  

Democratic Alliance shadow minister of transport Manny de Freitas feels strongly about RABS in its current form because it doesn’t matter who’s at fault, meaning drunk and reckless drivers will get away with breaking the law. But if medical costs, loss of support, loss of income, funeral expenses and legal costs are added, the RABS benefits will exceed the current budget of R30 billion annually by a “very large margin”.

“Because of the high unemployment rate, we estimate the non-employment benefit in terms of RABS alone to be in the order of R20 billion a year,” said De Freitas. “Our concern is, due to the limited budget, the only way that RABS will be able to function will be through the limitation of rights and benefits We are deeply concerned the introduction of RABS means further erosion and worsening of the position of the road accident victim in South Africa – especially for the more productive tax-paying section of this constituency.”

De Freitas says not only is RABS unaffordable to implement, but it isn’t aligned to the needs of the average crash victim. It abolishes victims’ constitutionally-enshrined common law rights to access to the courts. The party has called for more consultation with stakeholders and that those consultations be factored into decisions.

Moral hazard

Gert Nel, of Gert Nel Attorneys, which is representing the Law Society of the Northern Provinces in the matter and attended the presentations, says the RAF is a good system but its administration is problematic, which doesn’t justify changing the law.

“If it did, we wouldn’t have these issues,” he said. “Rather than make our roads safer and employing more traffic officers, they want to introduce new laws.”

Kirstie Haslam, of DSC attorneys, who also attended the presentations, says as much as 65 percent of crashes are caused by drunk drivers but since that isn’t a Schedule 1 offence, such drivers could end up being compensated. Then there’s the moral hazard risk: “There’s provision for unemployed people to get the monthly benefit based on the AANI. That temptation will be significant.”

Nel agrees: “It incentivises being in an accident – a beggar on the street corner, who is desperate, might get somebody to drive over their foot. They would immediately qualify for an annual national income of about R44 000 a year.”

‘Highly speculative’ statistics

Haslam says the Transport Department based its statistics on a single actuarial study, which is “highly speculative”.

“All actuaries who came to Parliament said that study should be subject to peer review, she pointed out. “The DoT’s own study showed huge variance – if you adjust one aspect, it could have huge impact.”

The DoT, which wasn’t able to comment on this by deadline, has also not ironed out its tariffs, Nel said. “But how do you know the system is cheaper if you don’t know at what rate you’re going to pay? You can’t rely on public health, and it’s a constitutional issue to have access to private health.”

Nel said a no-fault system wouldn’t work because it would be too expensive. “To justify why no-fault will work here, they compared us to Namibia – with a much smaller population and not a third of the vehicles or accident rate. It’s going to cost a vast amount of money to fund this.””

Buried in the report, Haslam noted a section speaking about funding requirements that mentions doubling the fuel levy to subsidise it. The public consultation process, De Freitas said, was likely to take place from July until September, but Haslam believes it’s “paying lip service” to the process.

“At the end of the parliamentary hearings,” he said, “they passed a motion of desirability, which is a very important step in this process.”

‘Vested interest’

But the RAF says the legal profession and intermediaries have the most to lose if RABS is passed.

“They have a significant vested financial interest in, and financial dependence on, retaining the status quo,” it said. “In the past financial year the RAF paid R8.3 billion (unaudited figure) in intermediary costs. In addition to the aforementioned figure, these intermediaries also retain a substantial further amount as contingency fees recovered from the compensation paid by the RAF to the claimant. In a report prepared for the RAF in 2009 by a professor at the University of Pretoria, a view was expressed that as much as 70 pecent of the fuel levy collected to pay claims does not reach its intended beneficiary, the road accident victim.”

The RAF has denied the DoT tagged the bill to bypass muster. It says consultation’s been thorough and inclusive, starting with a commission of inquiry appointed in 1999, headed by Justice Kathy Satchwell. There were also “widespread” stakeholder consultations over the years with industry groupings from commuter groups, the insurance, funeral, medical and legal industries as well as disability groups.

“Parliament has tagged the bill as a section 75 bill,” it insisted. “Contrary to what the Law Society states, section 75 bills do go to the National Council of Provinces. At no point was the process of consultation rushed and claims of this nature are irrational. There has been extensive consultation to date, with further consultation still to take place.”

Benefits capped 

The fund says RABS does provide for earning thresholds.

“If you earn above the earning threshold you are not excluded from claiming a benefit, as alleged by the Law Society, but the benefit you are able to claim is then capped at the upper threshold. This is also the position under the current RAF dispensation and is therefore not new. As regards those who do not earn, or earn below the average annual national income, their benefits are based on a deemed income equal to the average annual national income.”

As regards so-called lifestyle benefits (or general damages), the proposed RABS scheme “prioritises need over loss, and expands access to 40 percent more claimants, especially the poor, who will gain access to benefits they do not have at present. The Law Society has in the past, and will likely continue, to publicly criticise the bill, but this is to be expected from an industry that stands to lose billions if the bill comes to fruition.”

The Star

Oral Submissions Team

Gert Nel’s Oral Submissions Regarding Proposed New RABS Bill

Gert Nel recently made oral submissions regarding the proposed new RABS bill, on behalf of the LSNP on invitation of the PCOT (Parliamentary Committee on Transport).

Mr. Nel explained to the honorable members that the proposed Scheme represents a very sensitive balancing act between affordability, the rights of the poor and the creation of a “good law”.

Oral Submissions TeamMr. Nel requested Advocate Carel van Jaarsveld (an expert on Constitutional issues); Kobus Pretorius (Actuary); Mrs. Elzeth Jacobz (Occupational Therapist) and Mr. Abel Lebereko to accompany him to Parliament.

Mr. Nel laid the basis of the LSNP’s Comments that were submitted in November 2017 and requested his panel of experts and Mr. Libereko to address the following contentious issues in the Bill:

  1. Adv Carel van JaarsveldConstitutional challenges will include but not be limited to the abolition of a victim’s common law right to sue the wrongdoer and the abolition of general damages;Thorough discussion on the victim’s limited rights of recourse under the RABS Administrator and comparative analysis of recommendations made by the Satchwell Commission and the RABS Bill.
  2. Kobus PretoriusA comparative study between the damages claimable under the current RAF dispensation and the proposed RABS Bill.The importance of securing a medical tariff: to gain certainty on the quality of service on offer by the RABS Administrator and to be able to qualify the affordability of the proposed Scheme.
  3. Elzeth JacobzHaving regard to one of the primary objectives of the RABS Administrator which is to provide rehabilitation to qualifying victims;The lack of infrastructure and the practical application of the Bill was demonstrated by way of a relevant case study.
  4. Mr. Abel Lebereko –  Featured in the Newspaper Article in the Pta News in 2017Oral Submissions Gert NelA victim of the RAF’s direct claim approach (used as comparison with the RABS Bill which excludes and/or limit the victim from engaging a legal representative;Mr. Lebereko’s experience was explained to the honorable members who apologized to Mr. Lebereko and confirmed that he matter will be addressed by the Department of Transport.

The response by the Portfolio members were very positive and requested all the participants who submitted oral comment to place their views in writing and also consider possible solutions.

It was clear that the Department of Transport still has a lot to do and there were calls from some of the Portfolio members to engage with the Department and work together in creating a Bill for the people.

Related Reading