Mov­ing the goal­posts

Amend­ment needs your at­ten­tion

Finweek English Edition - - Creating Wealth -

IT’S WELL KNOWN that the Road Ac­ci­dent Fund (RAF), which has pro­vided com­pen­sa­tion for vic­tims of mo­tor ve­hi­cle ac­ci­dents since 1942, is in trou­ble. It cur­rently has a deficit of R20bn, threat­en­ing its fu­ture vi­a­bil­ity. That was no doubt the think­ing be­hind the Road Ac­ci­dent Fund Amend­ment Act (Num­ber 19 of 2005) that came into ef­fect on 1 Au­gust 2008. It aims to re­duce the ex­pen­di­ture of the fund.

Glen­rand MIB, in its Client Mon­i­tor cir­cu­lar to clients, notes that while cover is re­duced un­der the fund, it’s also aug­mented in a few re­spects. What’s im­por­tantly needed is for med­i­cal scheme trustees to es­tab­lish ex­actly what a scheme will cover (and may not cover) un­der the Amend­ment and to in­form mem­bers. In­di­vid­u­als will also have to look at their full in­sur­ance cover in re­la­tion to the Amend­ment. Med­i­cal top up cover may be re­quired if not fully cov­ered by the med­i­cal scheme.

One ma­te­rial change to the RAF in­tro­duced through the Amend­ment is that claims are now capped at R160 000/year. “The RAF pro­tects you should you neg­li­gently in­jure or kill some­one while driv­ing your car,” says Rod Pear­son at Glen­rand MIB. “In­stead of them su­ing you for their in­juries, their claim lies against the RAF. Now their claim will be lim­ited to R160 000/year for loss of in­come – or sup­port for their sur­viv­ing de­pen­dants – without any op­tion to sue you at com­mon law for the bal­ance of their loss.” Pear­son says that’s a se­ri­ously con­tentious is­sue.

Deneys Reitz part­ner David Kapelus un­der­lines that, say­ing there’s “no right of action by such in­jured per­son, or a de­pen­dant of a de­ceased bread­win­ner, against the wrong­doer” ex­cept in cir­cum­stances where the RAF is un­able to pay any com­pen­sa­tion.

How­ever, as the Amended Act stands now, Kapelus says a per­son’s full com­mon law dam­ages – in re­spect of loss of earn­ings, med­i­cal ex­penses that ex­ceed the pub­lic health tar­iff, gen­eral dam­ages and loss of sup­port – aren’t re­cov­er­able in cir­cum­stances where: • The per­son earns more than R160 000/year. The per­son un­der­goes med­i­cal treat­ment in the pri­vate sec­tor at a cost in ex­cess of the pub­lic health tar­iff. The per­son doesn’t suf­fer a se­ri­ous in­jury, there­fore ex­clud­ing gen­eral dam­ages. The to­tal loss of all de­pen­dants ex­ceeds R160 000/year. Pear­son de­scribes med­i­cal treat­ment at pub­lic hospi­tal rates as “se­ri­ously in­ad­e­quate”, though the RAF will pay more for emer­gency treat­ment. The capped R160 000 will also be ad­justed quar­terly for inflation.

What do in­di­vid­u­als do in the light of th­ese changes to the Act? He says there’s a need to en­sure that risks such as those listed be­low are cov­ered: • Your med­i­cal aid in­cludes road ac­ci­dents and that lim­its are suf­fi­cient to cover you at pri­vate hos­pi­tals, should you wish, es­pe­cially for emer­gen- cy med­i­cal treat­ment. You have ad­e­quate med­i­cal aid top up. You have ad­e­quate life, per­sonal ac­ci­dent, in­come pro­tec­tion and hospi­tal plan cover. You in­sure for law suits you may have to wage. It might sound daunt­ing but in­di­vid­u­als, and es­pe­cially med­i­cal scheme trustees, must make sure there’s suf­fi­cient cover to meet the Amend­ment.

SHAUN HAR­RIS shaunh@fin­week.co.za

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