Finance

Road Accident Fund unable to pay claims due to lack of funds

With recent reports of increased claims from the Road Accident Fund (RAF) concerns have been raised regarding the solvency of the fund.

During the 2018/19 financial year more than 229 000 claims were finalised by the RAF, an increase of 13% compared to the previous year.

Acting chief executive for the RAF, Lindelwa Xingwana-Jabavu said that more than R40-billion in claims had been paid, an increase of R6-billion from the previous year.

There are currently R11.2-billion in claims which have been finalised but due to cash constraints, cannot be paid.

The RAF was set up to compensate victims of road accidents and provide support with regards to future treatments and rehabilitation, the fund is however running at a deficit of R262.2-billion.

During Xingwana-Jabavu’s presentation of the 2018/19 report to Parliament’s portfolio committee on Wednesday it was noted that the fund has not been solvent since 1981, and has been the subject of nine commissions of inquiry since the 1940s.

The fund which is dependent on fuel levies to meet its ever-increasing liabilities has been cash-strapped for the past five years, yet is still focused on improving its business processes to create an organisation which will better serve its citizens.

The recent increase of 30c/l in RAF Fuel Levy which came into effect on April 1 last year had increased revenue by 15.8% (R43.2-billion).

According to Xingwana-Jabavu, almost 2 100 fraudulent claims which total around R1,45-billion were identified and nine people were arrested before payments had been issued.

Board chair Dr Matsontso Mathebula detailed that during the 2018/19 financial year, R3.6-billion had been paid toward medical costs, R160-million toward funeral costs, R10.3-billion for legal and other expert fees, R9.2-billion toward loss of earnings and support for those who qualified, amounting to R42.6-billion.

Drivers who are at fault are unable to claim compensation from the RAF, and as investigations need to be conducted, some cases take a considerable amount of time to finalise.

This often becomes a problem where people are unable to obtain medical treatment or dependents of people who are killed are unable to receive required assistance at a time when needed.

Government cannot continually increase the Fuel levy in order to bail out the RAF.

As it stands, the price of fuel is R15.79 per litre which are leading to higher transport costs and food prices.

The RAF has therefore no longer seen as a viable option and experts may have to be brought in to plan a way forward.