The Road Accident Benefit Scheme (RABS) is a “no fault” public insurance scheme proposed by the Department of Transport as a replacement for the Road Accident Fund (RAF). Currently, the RAF is a state-supported insurance fund that provides compensation to the victims of road accidents in South Africa.

Below are answers to a few commonly asked questions, outlining differences between the two systems.

Is there a need for a new system?

As a result of maladministration and mismanagement, the RAF has been in financial difficulty for some time. Last year the situation came to a head when RAF assets were seized by sheriffs of the court towards settlement of the Fund’s outstanding debts, and payments to accident victims were delayed.

The National Treasury’s Budget Review in 2015 stated that the RAF’s long-term liabilities were estimated at R98,5 billion and were projected to grow at 15 percent each year. Despite a bail-out by Treasury, in the form of a 50 cent per litre increase to the fuel levy in 2015, the Fund’s finances remain in the red.

The Transport Department has punted RABS, the proposed replacement, as being more efficient and economical, but it doesn’t appear to be a reasonable, fair or practical solution to the RAF’s shortcomings.

Is RABS going to be better than the RAF?

No, unfortunately not. Although the RAF is plagued by serious issues, the proposed RABS isn’t an acceptable replacement. Compensation provided to road accident victims and their dependants is expected to be significantly reduced, the administrative process is set to be heavily balanced in favour of the scheme and RABS has hefty, negative financial implications for taxpayers.

Who would be able to claim under the RABS?

The RAF compensates road accident victims who’ve been seriously injured due to accidents that they weren’t fully responsible for causing.

In contrast, RABS is intended to be a “no-fault” system. In other words, all individuals seriously injured in road accidents will be able to claim, regardless of whether they were directly responsible for the accidents.

This means drunk and negligent drivers who cause the deaths or serious injuries of other motorists, passengers, cyclists or pedestrians will qualify for financial benefits.

The “no fault” nature of the RABS could lead to a major spike in the number of applications received by the fund administration. This will result in a massive reduction to the compensation that victims receive.

How will payments to road accident victims be impacted?

The proposed RABS includes far-reaching changes to the nature and value of payments for successful claims. These are among the key differences from the existing RAF system:

• payments for loss of income will no longer be made in lump sums; instead they’re to be paid monthly and will be capped and in some cases limited to the national average salary (approximately R 3 500 per month)
• regardless of whether an individual has been fully rehabilitated, payments will automatically cease after 15 years; when the injured party returns to work; or when the injured party reaches the age of 60
• loss of support payments made to the spouse of a deceased breadwinner will cease after 15 years or when the spouse reaches the age of 60 years, whichever is sooner
• students will be considered unemployed and won’t qualify for compensation for loss of potential earnings, payments for loss of income (if they’re totally incapacitated) will be capped at the national average
• minors will qualify for compensation for lost earning potential – again capped at the national average – only when they turn 18, regardless of how serious their injuries are.

How will the administration process be affected?

RABS is set to introduce intricate and cumbersome administrative procedures. These will leave many claimants vulnerable and without support.

Road accident victims and their dependants will not be entitled to claim from the RABS administration for the first 60 days following an accident.

It’s proposed that all claims will need to be submitted electronically. Also, claimants will have to cover the costs of obtaining medical and police reports, with limited potential for reimbursement through the fund.

The RABS Administrator’s decision to accept or reject a claim will be subject to worryingly short time limits, and claimants will not necessarily be informed if their claims are rejected, placing the burden on them to follow up with the Administrator regarding the outcome of their claim.

The RABS administration would also handle all the appeals for rejected claims, making claimants vulnerable to the same system that rejected their claims initially.

Has RABS been approved?

Despite objections, the RABS Bill was approved by Cabinet on 29 March 2017 to be submitted to Parliament. This was followed by a public consultation process, which lasted up to 14 August 2018. The consultation process was extremely limited and widely criticised. For example, the Transport Department consulted directly with only 24 people – and in Limpopo, the public was given just three hours to comment. The Bill is now awaiting final approval by the Portfolio Committee on Transport before being referred to the National Assembly for debate and voting.

What are other implications of the RABS Bill?

The RAF is already proving unable to cope with the high financial and administrative burden of the claims it receives. It’s highly unlikely that RABS will succeed where the RAF hasn’t, especially given an expected increase in the volume of claims.

What’s more, the new scheme is likely to be far more expensive than the RAF – and it’s taxpayers who’ll bear the brunt. To process and manage the predicted volume of claims, it’s likely that the RABS will need to employ a large administrative workforce and its own medical staff, and open branches across the country.

Adding to costs, both RABS and RAF would have to run side-by-side for an estimated minimum of 8 to 10 years while the new system is being implemented.

The current RAF fuel levy is expected to rise by at least 75% to provide the necessary funding.

Will I still be able to hire an attorney?

RABS does not exclude a claimant’s right to consult an attorney specialising in road accident claims. However, claimants will need to compile and submit their claims personally.

The termination of lump sum payments will leave the majority of South Africans unable to afford legal representation, leaving them vulnerable to the failings of an overburdened and potentially unfair system.

This is likely to result in the rejection of otherwise valid claims and deprives individuals of options for enforcing their right to compensation.

[Guest Post via DSC Attorneys]