The Road Accident Fund (RAF) may soon be replaced by the Road Accident Benefit Scheme (RABS) changing the way in which claims are made and paid. Justmoney spoke to Charlene Louw, general manager for Legal, Regulation and Compliance at the RAF to better understand the changes taking place.
The RABS Bill is intended to replace the RAF once it is enacted. According to Louw, the new legislation will see benefits linked to a particular formula, which will make it easier for claimants when laying a claim through the system. Claimants will know up front how much loss of support or loss of earnings they may receive.
RAF vs RABS
The current system of the RAF “has runaway costs and has really become expensive to the fiscus, the country economically can simply not carry this type of system any longer,” pointed out Louw. The RAF as it stands is not sustainable or affordable anymore due to how it operates, which led to the proposed new structure.
Louw explained that the new system benefits both the claimant and the scheme (RABS). “From a claimant perspective they don’t receive a lump sum that sometimes really does get misused, they then are sustained over a longer period, and I think that is really what a social security scheme is meant to do, to protect people and their livelihood over a longer period. And so even from a scheme perspective you only imagine that where payments are done in a structured fashion it does then improve cash flow for that particular scheme, because naturally when you are paying out millions at a time it certainly does eat into the cash flow and does limit the financial capability of the entity.”
When RABS is established, the RAF will fall away. However, before ceasing entirely, claims that are still open under the RAF will be finalised.
“The emphasis with RABS is we want to see the support of this legislation because it is one that will allow access to all individuals who have been involved in accidents. What now what we have under RAF, it excludes certain individuals. And if we are to operate in a social security space we’ve got to have everyone having the benefit of RABS and seeing the benefit of RABS, and not just some,” added Louw.
The claims process
According to Louw, the claims process under the new system will be different in that under RABS it will be less complex.
“It will be a little bit easier to approach that particular scheme. Once you have defined benefits and you have removed fault, because I think the complexity that is the RAF is really premised on the fact that we have to now go to court to determine who was a fault in an accident, whereas with RABS what we are saying is it’s a no fault system. If you are involved in a car accident and we have verified that you have been injured in that car accident you will receive compensation without us having to determine who was at fault and who was negligent in that accident. Naturally there will be a minimum need then to approach the courts or to even approach an attorney to litigate a matter on your behalf and you will then be able to approach the RAB scheme directly, lodge your claim on a particular form, even online which is what we intend to do, and essentially you would receive your payment shortly thereafter,” explained Louw.
Furthermore, under RABS vocational training is being built into the system. If you are unable to go back to your profession following the accident and rehabilitation, but are still able to work, RABS will offer training to teach you a new skill so that you can still find employment going forward. The cost of the training will be covered by RABS.
“Naturally it speaks to partnerships that we would have to have with training institutions where we can send road accident victims there, get them to learn a new skill if they can’t go back to their old jobs, because sometimes individuals can be rehabilitated so that they can do what they did before, but where they can’t and they need to learn a new skill, the partnership with different institutions that offer this will need to be strengthened such that we can get our road accident victims upskilled,” said Louw.
The RAF in debt
As stated above, the current RAF structure is expensive and unaffordable. Louw noted that the RAF is currently sitting with a deficit (liability) of R145 billion. In addition, the not yet paid liability is in the region of about R9.5 billion. “Those are matters that we’ve settled but we simple doing have the cash in order to pay them immediately,” explained Louw.
“We are addressing [these issues] in different ways. We are engaging the DoT, who is our principle and our shareholder, we are engaging National Treasury and really looking at ways of how we can facilitate more money coming into the RAF for us to be able to clear this debt. But I think within ourselves we are looking at driving efficiency so we can drive down the costs. We have a huge number of cost saving initiatives that we are looking at and really measuring how we can bring down the cost, such that we have sufficient money to meet some of these demands that we have financially,” added Louw.
Handy tip: If you are having debt problems, you can apply for debt counselling through Justmoney.