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 APRIL 2010 ROAD ACCIDENT FUND - WHAT HAS CHANGED AND SHOULD WE BE WORRIED? The trials and tribulations of the beleaguered Road Accident Fund (RAF) have featured prominently in the news. The RAF provides cover to road users against injuries sustained or death arising from accidents involving motor vehicles. It is in the form of indemnity insurance to persons who caused the accident and personal injury and death insurance to victims. Controversy arose when the Act was amended. Although the compensation system remains fault-based, the amendments introduced many changes, that the Law Society of South Africa (LSSA) and others challenged as unconstitutional. Among the contentious issues are: HOSPITAL & MEDICAL EXPENSES The RAF was liable for the reasonable/necessary expenses resulting from injuries sustained. In terms of the amendments, this liability is restricted to certain tariffs which, the LSSA has argued, are woefully inadequate. LOSS OF INCOME / SUPPORT RAF's liability was unlimited apart from certain special instances. Now it has been capped at a maximum of R160,000.00 a year. This is a very controversial issue, exacerbated by the fact that the claimant is still prevented from claiming the balance from the wrongdoer. The LSSA argued that to take away this common law right in instances where the RAF has restricted its own liability is unconstitutional. The RAF's argument on this point is that the vast majority of South Africans earn less than R160,000.00 a year and that the minority that earns in excess of this has the means to take out personal insurance to cover the balance. GENERAL DAMAGES These include pain and suffering, disfigurement, etc. – liability that was previously unlimited. Currently the RAF is only liable in instances where a "serious injury" has been sustained. An injury will be deemed "serious" if it results in 30% or more impairment of the whole person as provided for in the American Medical Association Guides (AMA Guides). The LSSA argues that the AMA Guides, for various reasons, are not an appropriate long-term method of assessment. The RAF has won the first round in the High Court in Pretoria, but this case is almost certainly destined for the Constitutional Court. Whatever the result, what is not in dispute is that the RAF has long been under serious financial strain and its long-term sustainability is certainly in question. One hopes that it will not have to ultimately invoke Section 21 of the Act, which essentially declares that it is unable to pay compensation and that claimants need to recover their damages directly from the wrongdoers. This would be a particularly undesirable outcome for obvious reasons. Similar insurance cover to that provided by the RAF would mean costly and, in many cases, prohibitively expensive premiums, even to South Africa's minority. We wait with bated breath. |
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| FOR FURTHER INFORMATION CONTACT: |
Litigation Department T: (033) 341 9100 F: (033) 392 4600 E: litigation@tmj.co.za |
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