Neels Blom Writer at large
The RAF, which is funded entirely from a fuel levy and interest earned, has accumulated a R206.3bn net deficit. It has been insolvent since 1981. Picture: ISTOCK
The RAF, which is funded entirely from a fuel levy and interest earned, has accumulated a R206.3bn net deficit. It has been insolvent since 1981. Picture: ISTOCK

The Road Accident Fund (RAF) is ramping up efforts to transform the agency from an insolvent fund into what it calls a sustainable social-security safety net for people affected by motor-vehicle accidents.

The RAF, which is funded entirely from a fuel levy and interest earned, has accumulated a R206.3bn net deficit. It has been insolvent since 1981.

The fund pays compensation to accident victims and their dependants who can prove negligence or fault on the part of other drivers involved.

Acting CEO Lindelwa Jabavu  said on Tuesday that a bill before parliament  would replace the current fault-based fund with a no-fault road accident benefit scheme. The main reasons for change were that the agency  was inadequately funded and it  was “unreasonable, inequitable, unaffordable and unsustainable”, said Jabavu.

The fund  was on average about R9bn in arrears monthly in claims that the agency  had already approved, she said. “We can’t continue like this.”

Revenue for the year to end-March rose to R37.34bn from the previous R34.34bn after an increase in the RAF fuel levy and a cut in diesel rebates.

The revenue model for the proposed no-fault road accident benefit scheme would be unchanged from that of the RAF.  Switching benefits from lump-sum payouts to an installment system would avoid overpayment to beneficiaries. Costs amounting to about R5bn a month related to litigation in determining fault under the RAF system  would also be avoided, said Jabavu.

An RAF medical review board  would adjudicate benefit- scheme claims, and capped defined benefits would be paid directly to claimants and to healthcare entities on a predetermined panel.

The bill has been criticised by the DA, which chairs the transport portfolio committee in parliament.

“The bill proposes that anyone claiming from the scheme would not be required to prove that a crash was caused by any party involved in it. So, if an accident was caused by a person, the guilty one will also be able to claim from the proposed scheme. A drunk driver would be rewarded for driving under the influence of alcohol,” DA MP Manny de Freitas said in a letter to Business Day.

Road accident victims  would benefit substantially less than they got now, he said.

Jabavu disagreed. Lump-sum payments  were often used to buy luxury items, she said. “This results in many claimants being in a position where they are unable to sustain themselves. It is the lotto factor,” she said.

blomn@businesslive.co.za

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