Dramatic change is coming at the RAF

Change is coming at the financially distressed Road Accident Fund (RAF) and its new interim board has plans to fix the organisation.

For one, it intends from next month to aggressively start paying the almost R19 billion in outstanding claims older than 180 days, according to RAF’s interim board chair Kenneth Brown.

Brown told Moneyweb the new interim board is already thinking beyond the fund’s current challenges and considering how to modernise its entire claims systems. His comments followed an urgent meeting on Friday with attorney associations and sheriffs, regarding the implications of the High Court dismissing the RAF’s urgent application for an extension of the 180-day payment moratorium.

The dismissal of its application means the RAF will now have to pay claims within 14 calendar days instead of almost six months.

Brown said the RAF board had “a very good meeting,” adding that the lawyers and their association were “really very accommodating in understanding the challenge and how this challenge needs to be resolved at the end of the day.”

“From our side, we have made a commitment to find ways as soon as possible [to resolve the outstanding claims issue]. “In fact, we already have ideas on how we are going to do it – but I could not communicate that yet because it needs to be endorsed by the board,” he said.

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Brown said the RAF’s interim board is meeting on Tuesday (9 September) and acting RAF CEO Phathutshedzo Lukhwareni and the executive “are going to present a clear implementation plan on how these backlogs and all the outstanding claims are actually going to be processed over a period of time. The board will sit, go through it, look at the options and recommendations and once we find commonality between ourselves, the board will again in two weeks’ time meet with the [attorney] associations or communicate with them via other channels on the programme of action we will be putting in place.

“Our intention, once we have dotted all the ‘i’s’ and crossed all the ‘t’s’, is to start repayments aggressively from October onwards.

“But we will release all the details to everyone once the board has sat down and has a clear path on how to deal with that,” he said.

However, Brown confirmed the estimated RAF liabilities that are outstanding for 180 days, which have become immediately payable, amount to about R19 billion, “and the fund doesn’t have the money to pay that.”

“So, we will have to schedule it, we will have to undertake detailed cash flow management and find ways of financing quite a bit of that,” he said, adding that the board will provide more details after it has looked at all the options.

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Brown added it was a very productive meeting with the attorney associations and admitted he could sense the attorneys’ frustration. He said this was unfortunate for the board, because they are talking about the livelihoods of people who have been victims of accidents – some disabled, and others no longer able to work.

“We can’t keep treating people with that level of indignity.

“We, as the board and the RAF, have put our heads on the block that if we can’t fix this thing in the shortest space of time, or over a prolonged kind of period whether it’s a year or whatever, we will have to look at ourselves.

“We can’t have people who are being paid big money and just not doing their work, so we have to evaluate basically everything,” he said.

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Internal and external issues

Brown said there are problems within the RAF system which cut both ways – to the fund and attorneys – but the meeting [focused] on how they can work together to resolve a lot of these matters.

He said the RAF is open to listening to everybody, but stressed there are also matters that “are in the purview of government”.

“We can’t compromise on certain things at the end of the day, but it does not mean we must close up. We just need to find ways of dealing with these matters,” he said.

Brown did not specify what these issues are, but it is believed they include the stated intention of Minister of Transport Barbara Creecy to finalise the Road Accident Benefit Scheme (RABS) Bill, which will introduce a no-fault system to make it easier for road accident victims to access benefits without costly legal bills.

The legal fraternity and other RAF stakeholders are generally opposed to the RABS Bill.

Another RAF issue, according to Brown, is the need to modernise the entire claims system to be more “cradle to grave”. “Once an accident happens, how do you use technology with first responders to start initiating the claims process? As the board, we are also now seized with how we modernise the RAF, but we need capacity to be able to deal with that in the longer term.

“We need to fix the organisation piece by piece, and part of fixing it involves starting by at least paying all outstanding creditors – because it’s not only the lawyers who are owed. There is a lot of service providers – whether it’s in healthcare, hospices, physiotherapists, and so on.

“We owe those kinds of suppliers close to R2 billion, and we need to sort that out as a matter of urgency,” he said.

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‘A meeting of the minds’

Conrad van der Vyver, the Pretoria Attorneys Association (PAA) executive committee member for RAF litigation, said there was “a clear meeting of the minds” at the meeting, especially between the attorneys present and Brown.

“I must commend him. He was in a difficult position, and he came out from the get-go and said there is a lot that is not functioning correctly, and that they intend to fix it,” he said.

Van der Vyver said the urgency to ensure the RAF becomes financially sustainable and meets its constitutional obligations was clear to see – which he described as “a genuine breath of fresh air”.

Personal Injury Plaintiff Lawyers Association (Pipla) chair Advocate Justin Erasmus said Pipla representatives attended the meeting, where the RAF took note of the issues raised. He said it appears the new interim board is trying to clear some of the mess created in the past by fund executives.

However, Erasmus said this does not necessarily mean the RAF board will not support the RABS Bill and other initiatives.

“But that’s another battle. I think they just want to clear the immediate problems (first).

“I have heard via people [at the RAF] that they have brought money back from cash reserves and approved overtime at the Menlyn [offices],” he said.

This article was republished from Moneyweb. Read the original here.