Understanding the Road Accident Fund Crisis—and Why Passenger Liability Cover Matters for Ibiliti Policyholders
What’s Happening with the RAF?
If you operate passenger vehicles in South Africa, you’ve likely heard of the Road Accident Fund (RAF). This fund is supposed to compensate victims of road accidents, including your passengers. However, the RAF is in crisis:
- Massive Debt: The RAF’s liabilities exceed R518 billion, with only R33 billion in assets.
- Management and Governance Issues: Repeat disruptions, dissolved boards, and recent executive suspensions have hampered the RAF’s effectiveness.
- Slow and Uncertain Claims: Over the past few years, claims processing and payouts have dropped dramatically.
- Proposed Legal Changes: The government is planning to replace the RAF with the Road Accident Benefit Scheme (RABS), a new system that introduces capped, no-fault benefits, excludes some groups (like non-citizens and informal workers), and removes the right to sue for pain and suffering.
Bottom line: The RAF’s financial and legal future is uncertain. Bus operators and their advisors must re-evaluate how they protect themselves and their passengers.
Passenger Liability Cover: A Crucial Safety Net in the Ibiliti Bus and Coach Solution
Given the instability in the RAF, passenger liability cover under the Ibiliti Bus and Coach policy is more important than ever for bus operators.
The Indirect Influence of AARTO
AARTO (Administrative Adjudication of Road Traffic Offences Act) introduces a points-demerit system and stricter enforcement of traffic laws nationwide. While AARTO’s central focus is road safety and driver discipline, its implementation can have several indirect effects for bus operators, the RAF, and insurance products like the Ibiliti Bus and Coach passenger liability cover:
- Improved Road Safety, Fewer Claims. Stricter penalties and enforcement could lead to safer roads with fewer accidents. This may reduce the frequency of claims against the RAF and passenger liability insurance.
- Higher Risk for Non-compliance. Operators and drivers accumulating demerit points may risk losing their licenses. Incidents involving non-compliant drivers could affect claim outcomes and possibly result in repudiated claims, especially where wilful negligence is shown.
- Impact on Claims Process and Insurability. Underwriters might increasingly assess clients based on compliance with AARTO regulations. Operators with poor AARTO records may face higher premiums or difficulty securing cover.
- Regulatory non-compliance may also be cited as a reason for insurers to scrutinise or deny claims, especially where there is a direct causal link between the traffic offence and the incident. RAF and Legal Proceedings. AARTO-generated records could become relevant in determining liability or contributory negligence in RAF and passenger liability claims—impacting legal outcomes and settlement values.
Given the turbulence within the RAF and added compliance scrutiny from AARTO, passenger liability cover under the Ibiliti Bus Cover policy becomes even more vital for bus operators.
What is Passenger Liability Cover?
Passenger liability is a specific protection in your Ibiliti policy that covers you if a passenger is injured and the RAF either can’t or won’t pay their claim.
Coverage Includes:
- Injury to Passengers: If a passenger is injured and compensation isn’t provided (for example, due to legislative changes, RAF insolvency, or accidents outside RAF’s jurisdiction), this cover responds.
- Secondary Emotional Shock: The policy also pays out for claims from people who witness or are informed about a passenger’s injury and suffer emotional shock.
- Claims Preparation Costs: Automatically includes up to R10,000 to assist with claim-related expenses.
When Does This Policy Respond?
- When the RAF is unable to meet its payment obligations.
- If you operate in regions where the RAF does not apply.
- When claims for “secondary victims” (emotional shock) are valid.
- When you need to meet provincial permit board requirements for public transport.
Key Terms and Guidance for Clients right now
- Passenger Liability Cover is Optional: It is not compulsory and can be removed, but doing so increases your financial risk, especially as RAF reliability declines and legal scrutiny increases under AARTO
- Coverage Limitations: The policy supplements and does not replace, statutory compensation
- Claims Process: Ensure that all incidents are properly documented and reported to us promptly
- Comply with Road Laws: The policy can only respond when the Insured adheres to the Road Laws and acts lawfully.
- Professional Advice Needed: This summary is for educational purposes only. For tailored guidance and advise, always consult your insurance advisor.
Anticipated considerations which may impact your clients when AARTO has been implemented:
- A clean AARTO record strengthens your insurability and claim outcomes. Non-compliance could lead insurers to limit or deny cover.
- Ensure compliance with AARTO and traffic laws to avoid complications in the claims process.
- Full disclosure of driver and operational compliance will be more critical.
Why You Should Keep (or Add) Passenger Liability Cover
With the RAF in crisis and AARTO introducing tighter compliance and enforcement, passenger liability cover is more than a fallback—it’s a business-critical safety net.
As an underwriter and risk advisor, we are of the opinion operators must remain prudent and maintaining robust cover and prioritising compliance to safeguard their business and passengers.
Implementation of the AARTO act has been deferred by the Minister of transport to the 1st of July 2026.
As an advisor in short-term insurance, it’s vital to explain this to your clients:
“Your Ibiliti passenger liability cover protects you from the gaps created by the RAF’s problems. Removing this cover now could leave your business financially exposed if a passenger is injured and the RAF can’t pay.”
Conclusion
The future of the RAF is uncertain, and proposed government changes could limit compensation to your passengers. The Ibiliti Bus and Coach passenger liability cover is an essential safeguard that ensures your client’s business remains protected.
As a professional advisor, make sure your clients are aware of these risks and understand the value of keeping this coverage in place.
Date: 11.11.2025
Author: Yolande van Niekerk
Published by: © Ibiliti Risk Solutions FSP43404 on the 11th September 2025
Insured by Old Mutual Alternative Risk Transfer Insure Limited Ltd T/A OMART Insure, a licensed Non-Life Insurer and authorised FSP.
