'Cash-Strapped' Road Accident Fund Seeks to Pay R14 Billion to Victims of Accidents

• The Road Accident Fund (RAF) is needing to foot a bill of around R14 billion for accident victims in South Africa
• Despite its obvious cash flow problems, the national government department insists it is not at a stage where it needs a bailout
• The sheriff of the court has attached assets of the Department of Transport due to the unpaid claims
• Minister of Transport Fikile Mbalula told parliament’s standing committee on public accounts (Scopa) victims would receive their payouts

The ailing Road Accident Fund (RAF) is scratching its head over more than R14 billion that it is needing to pay road accident victims.

Despite this and its obvious cash flow problems, the national government department insists it is not at a stage where it needs a bailout, according to a report by TimesLIVE.

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RAF is responsible for providing appropriate cover to all road users within the borders of South Africa. The fund rehabilitates and compensates persons injured in motor vehicles and claims it actively promotes the safe use of the country's roads.

Just days ago, the sheriff of the court attached assets of the Department of Transport due to unpaid claims. According to reports, the claims have been finalised but are still unpaid owing to cash flow issues.

Mbalula stresses claimants will be paid

Minister of Transport Fikile Mbalula, speaking before parliament’s standing committee on public accounts (Scopa) on Tuesday alongside RAF management, said victims would receive their payouts.

Mbalula said returning RAF back to financial stability will need an urgent regulatory and operational revamp. BusinessLIVE reported that this will include fast-tracking the claims process and doing away with lump-sum payments to victims to expedite the process of overhauling the fund.

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Management told Scopa they faced many challenges but assured parliament they are venturing on a new strategic plan to turn the tide.

Overhaul needed to address deficit crises

“We will increase the speed of the implementation of the new operational model. We should not only shorten the turnaround time for claims but treat all victims equitably,” he said.

RAF revealed that the average waiting period for payouts to claimants was an average of four years. The average value of a claim increased by R20 004, from R114 008 to R138 010 since March last year.

The fund said it receives an average of just over 4 350 summonses monthly, of which some could be fraudulent claims. It blamed its R5.3 billion deficit on the lack of early investigations and settlement of claims for this.

RAF reportedly spends most money on administration

In a recent new story, Briefly News reported that RAF credited the ongoing financial woes at the institution to an increase in administrative costs, including legal fees.

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The fund stated that for every R1 collected from the fuel levy, claimants receive a mere 45c. The state insurer revealed details in a response to a highly unexpected order recently granted by the High Court.

The order suspended all writs of attachments and execution against the fund's essential assets. The court also ordered that the RAF begin to clear the backlog of unpaid claims it has.

Source: Briefly News