Road Accident Fund paid out R22.2 billion in 2013/2014

OCTOBER 29, 2014

The Road Accident Fund (RAF) has paid a record number of claims amounting to R22.2 billion to crash survivors in the 2013/14 financial year.

“In the 2013/14 financial year, the number of open claims has reduced year-on-year to what is now less than half of what it was five years ago, indicating that administration is more efficient,” said RAF CEO Eugene Watson.

“In the period under review, the number of open and reopened claims reduced to 198 140 from 212 085 (2012/13) and the total awaiting compensation or legal cost payments reduced by 47 627 from 279 912 (2012/13) to 232 285.

“Claims payments grew by 47% to a record high of R22.2 billion (2012/13: R15.2 billion),” he said.  

He said the RAF has improved productivity, controls, deployed cash efficiently and expanded its geographical footprint to make its services more accessible to all road users countrywide.

According to Watson, this is as a result of management interventions to optimise claim payments, efficient business processes, provision of additional staff members, and implementation of alternative claims administration.

While the rising provision for outstanding claims continues to place strain on the RAF’s financial resources, Watson said the organisation has bucked this trend by remaining committed to assessing and finalising claims in a speedy and efficient manner.

This is in light of the profound negative impact of road traffic accidents on victims from a health, vocational and social perspective.

The Auditor-General has also recognised the RAF’s prudent management of public funds by rewarding it with a second consecutive clean audit for the 2013/14 financial year.

“Reducing the frequency, severity and impact of accidents is the Fund’s highest priority, as the estimated cost of road crashes to South Africa’s economy remains staggeringly high at R306 billion per annum.  

“Despite this, the RAF will continue being the social security safety net for those who are maimed on SA’s roads. 

“During the year under review, the RAF continued its departure from a legacy of less than stellar performance, reinvigorating its efforts to make a socio-economic impact on families, homes and communities,” Watson said. 

He said the Fund has provided compensation in a time-efficient and cost-effective manner, while continually exhibiting the highest standard of financial and risk management.

He said over 7 000 funeral claims were paid by the RAF (in the context of 14 000 road fatalities per annum).

The RAF Board and management remain committed to implementing plans that will curb the growing deficit caused by the rising provision for outstanding claims.  

These plans include engaging the National Treasury and the Department of Transport on an on-going basis to resolve the short-, medium- and long-term funding position of the organisation.

However, Watson said a major challenge is that contingency fees in excess of an estimated 25% continue to be paid to attorneys, exacerbating the hardship accident victims suffer. In addition, 21% of total payments to claimants are still for legal fees, with R1.7 billion spent on RAF’s legal costs and R2.9 billion on claimant’s legal costs.

“Consequently, the litigious nature of the adversarial compensation scheme where one needs to prove fault, and the subjectivity in determining loss-of-earnings and support benefits, has seen a claim take between 12 to 60 months to finalise,” he said.

Road Accident Benefit Scheme

The Road Accident Benefit Scheme (RABS) Bill will address these challenges by eliminating the need to determine who was at fault, thus cutting out prolonged and often self-serving litigation.

In terms of the Scheme, payments will be made directly and on a monthly basis to claimants, medical and healthcare service providers.

RABS will also provide benefits for medical expenses, income support, family support and funeral benefits.