‘Simple way’ to settle RAF claims backlog

The Association for the Protection of Road Accident Victims (Aprav) has proposed the creation of a national Settlement Hub as a simple way to address the crisis at the Road Accident Fund (RAF) and clear its backlog of about 100 000 claims.

It would involve funding from National Treasury to clear claims that are ready to be settled without waiting for the RAF’s bigger problems to be fixed first.

The ‘bigger problems’ were summarised by Parliament’s Standing Committee on Public Accounts (Scopa) chair Songezo Zibi, who said on Friday the RAF is chronically underfunded – and even when its governance and operational problems are resolved, there will not be enough money to meet all the claim obligations.

While the future of the RAF and its funding challenges are being considered, Aprav vice chair Pieter de Bruyn, speaking at the National Press Club in Pretoria on Thursday, said a new RAF funding model cannot be implemented without addressing the backlog of claims.

He pointed out that less than 5% of the about 80 000 RAF claims are in dispute and less than 1% go to trial and need independent adjudication.

Against this backdrop, he questioned why 90% of RAF claims go to court.

“No wonder there is a legal bill of R6 billion [accumulated]. That bill is not because of attorneys, not because of the experts, not because of claimants. It was caused by not executing the [RAF] act and the RAF not doing its work.”

De Bruyn said the crisis that exists at the RAF has to be relieved.

Aprav believes the harm that has already been done must be repaired. There must be relief for claimants, and the RAF must be rebuilt for the future, he added.

Money that is owing

The move would cost National Treasury R16 billion, but this is about paying claimants who have been waiting for 10 years, said De Bruyn.

“This is really not a bailout.”

The funds would be used to pay claimants what they should have been paid years ago in one lump sum.

There are “vast differences” to bailouts granted to the likes of the SABC, South African Airways (SAA) and Eskom, he said, “because those organisations could not operate anymore and had been managed into the ground”.

“The RAF is funded by the fuel levy to the tune of R4.2 billion a month,” he said.

“It operates, it functions – but through corruption and the dereliction of duty in almost all possible layers, members of the public [have been] disadvantaged.”

How would it work?

De Bruyn said Settlement Hub would:

• Find the claims that are ready by sorting out claims already in the system into those ready to settle, those needing a little more information, and those that are genuinely disputed.
• Put the paperwork in one place and bring the legal, medical and financial evidence for each claim into a single, complete file.
• Put decision-makers in the room, with each claim going to a dedicated team of experienced claims professionals and RAF representatives with the real authority to settle, who will be joined by legal, medical or actuarial experts where the matter needs them.
• Settle what everyone agrees on, pay out the parts that are not in dispute and send only genuine disagreements to court.
• Track every case until the claimant is actually paid because a signed settlement is not the finish line.

The Settlement Hub would not replace the RAF or the courts, would not force victims to accept less than they are owed, and would not let an unproven or inflated claim slip through, said De Bruyn.

He stressed that the RAF would retain the right to challenge every claim it genuinely disputes, and any real dispute would still go to court.

The hub would simply put “people who can actually make a decision in a room, to do what the RAF should have been doing all along”.

It would not be another layer of bureaucracy, nor a mechanism to force the government to accept unlawful claims. He believes it would in fact identify unlawful claims by ensuring that claims are scrutinised properly.

Unlawful move ‘excluded up to 100 000 claimants’

Aprav chair Ngoako Mohlaloga said the RAF claims process that should have enabled access to compensation became a barrier to it through the RAF’s unlawful introduction of the RAF1 form, which has been declared unlawful by the Supreme Court of Appeal.

De Bruyn said the form and its absurd long list of illegalities and illegal requirements as opposed to the three simple requirements in the RAF Act ended up excluding up to 100 000 claimants that had valid claims that are now lost in the system because those people were unlawfully denied the opportunity to submit a claim.

He said the unlawful application of the form was allowed to happen by the minister of transport, the deputy minister, the portfolio committee on transport and the RAF executive.

“The fact is the act is a law of parliament and needs to be followed,” he said.

“You cannot have the discretion to follow a law [or not].”

Future of the RAF, and its future funding model?

Mohlaloga believes there is reason for hope for the RAF because the truth is no longer scattered across court judgments, audit disputes, unanswered letters and the experience of isolated victims but is now being assembled into one parliamentary record by Scopa.

De Bruyn said the RAF levy in the fuel price would not provide sufficient funding for the fund for the future but this is not because of consumers moving to electric vehicles (EVs).

“It’s a misnomer that EVs will totally dilute the fuel levy and the funding for the RAF.

“This is Africa, not Europe. The uptake of EVs in South Africa will remain miniscule and in no way a significant risk to the fuel levy. But the funding model must change, likely to a hybrid model,” he said.

De Bruyn said compulsory insurance is not a “silver bullet” for funding compensation for road accident victims, noting that a government commission rejected the idea in the late 1980s when the insurance system and third-party vehicle discs were terminated.

He said, at that time, there were 2.5 million cars on South Africa’s roads and now there are more than 10 million, and the sums Aprav has done with the assistance of actuaries and experts reveal the average cost of insurance to motorists would be R2 400 a month and R4 000 a month for taxi owners.

De Bruyn said the future RAF funding model will likely be a hybrid model, comprising the RAF levy in the fuel price, an insurance top-up for people who want additional benefits, and the involvement of the private sector, funders who will be prepared to buy some of the debtors books and liabilities.

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