Implications of Road Accident Fund reform for tourism industry

The amendments to the Road Accident Fund (RAF) introduced in August this year are both 'good news' and 'bad news' for tour operators involved in vehicle touring and transfers.

The 'bad news', says Mark Bush, Deputy Business Unit Manager at Alexander Forbes Risk Services, is that “the amendments to the Act significantly reduce a passenger's claim against the Road Accident Fund following a motor accident.”

For example since the amendments:

• Loss of income claims are restricted to R160,000 per annum.
• Similarly loss of support claims are restricted to R160 000 per annum.
• Medical expenses claims are based on public health tariffs.
• Claims for the likes of disfigurement, pain and suffering, disablement and loss of amenities of life will only apply in a case of 'serious injuries'.

The result of these restrictions is that both foreign and local travelers must ensure that they arrange adequate personal accident cover for themselves and their families whilst travelling in South Africa as they can no longer rely on adequate compensation from the Road Accident Fund.

The 'good news' for vehicle operators is that the Act now abolishes the passenger's right to claim against the driver of the vehicle that caused the accident or the employer of the driver.

“This restriction goes to the heart of the risk faced by vehicle owners and operators of game drive vehicles, tour buses, passenger transfer vehicles etc.” says Bush.

As such, the cost of passenger liability insurance cover should reduce markedly going forward.

“Nevertheless vehicle operators should maintain their existing passenger liability cover and, in addition, consider buying personal accident cover on behalf of passengers” advises Bush.

This is because, firstly, the new restrictions will only apply to motor vehicle accidents which occur in South Africa as neighbouring territories have different legislation.

While in time it is likely that many of our neighbouring countries will adopt similar legislation “for the meantime it is important for vehicle operators to maintain their current passenger liability cover if they are taking guests to neighbouring countries” says Bush.

Secondly, while the amendment applies to all passengers, both local and foreign “if the South African tour operator or its parent company has assets overseas, a foreign tourist could circumvent these recent amendments to the RAF Act by instituting a claim on the South African operators’ overseas assets,” cautions Bush.