- The Road Accident Fund (RAF) has committed to reducing the time it takes to pay out a claim from three years to just one
- The average payment term over the past quarter was 281 days, which was higher than the 180-day benchmark set by the RAF
- Minister of Transport Fikile Mbalula said the Road Accident Fund Amendment Bill, currently being tabled, will address the shortcomings at the fund
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The Road Accident Fund (RAF) plans to put its money where its mouth is by heavily slashing down on the current turnaround time for claim payouts.
The average waiting period for the claims process to run – from initiation stage to settlement – is three years. The organisation has the objective of whittling this down to just one year, according to a SABC News report.
IOL reported that the average payment term over the past quarter was 281 days, which was higher than the 180-day benchmark set by the RAF. But compared to the average time at the end of last year, when it took 312 days, it was an improvement.
Transport Minister justifies shortcomings echoed by ailing RAF
The cash-strapped fund recently briefed parliament’s standing committee on public accounts (Scopa) on its annual report, noting that its biggest cost drivers have come in the form of accidents and legal challenges.
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As of 31 March the previous year, the fund reportedly accumulated an annual deficit of R5.3 billion. Claims of up to R14 billion were finalised but could not be paid due to financial cash flow challenges.
Just days ago, the sheriff of the court attached assets of the Department of Transport due to the unpaid claims. The Minister of Transport Fikile Mbalula conceded that the fund has been in an undesirable financial position for many decades.
“For a long time, there has not been a central point between the fuel levy and the accident numbers on public roads.
"However, to worsen this constraint is the RAF's administration cost that is always on the rise," said Mbalula, who quoted figures to illustrate his point.
"Of the revenue collected, R17 billion or 40 per cent, goes to administrative costs with only R26 billion, or 60 per cent, received by claimants.
At the moment, the RAF’s biggest cost driver is the number of road accidents that occur on our public roads.”
As of 31 March the previous year, the fund reportedly accumulated an annual deficit of R5.3 billion. Mbalula said the Road Accident Fund Amendment Bill currently tabled before the Transport committee will address the shortcomings at the fund.
RAF might be changed into equitable benefit model
In related news, Briefly News recently reported that the RAF system is getting a new model that will allow all South Africans that need compensation from the fund to have access to it.
The Department of Social Development said the new equitable fund model will take away the financial burden of hiring lawyers in order to have access to the road accident victims who need it in South Africa, according to a report by SABC News.
According to the department's Director-General, Brenda Sibeko, applicants pay huge amounts of money to lawyers when they need to get compensation from the fund and the department wants to change that.
Source: Briefly News