Road Accident Fund pays out a record R22bn

The Road Accident Fund is a social service that supports those whose health, jobs and lives are impaired by traffic accidents.

The auditor-general has also recognised the fund’s prudent management of public money in the 2013/14 financial year by giving it with a second consecutive clean audit. (Image: RAF)

Brand South Africa Reporter

Improved efficiency has allowed South Africa’s Road Accident Fund to pay out a record number of claims to vehicle crash survivors in the 2013/14 financial year, amounting to R22.2-billion.

“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 Eugene Watson, the fund’s CEO.

Open and reopened claims were reduced from 212 085 in 2012/13 to 198 140 this year, and the total awaiting compensation or legal cost payments reduced by 47 627 – from 279 912 in 2012/13 to 232 285.

“Claims payments grew by 47% to a record high of R22.2-billion, from R15.2- billion in 2012/13,” Watson said.

The Road Accident Fund is a social service that supports those whose health, jobs and lives are impaired by traffic accidents.

“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,” Watson said.

“Despite this, the RAF will continue being the social security safety net for those who are maimed on South Africa’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 socioeconomic impact on families, homes and communities.”

He said the fund paid over 7 000 funeral claims, more than half of those resulting from the 14 000 road fatalities every year.

Watson said the record payout was the result of improved productivity and controls, with the fund deploying cash more efficiently and expanding its geographical footprint to make its services available to road users countrywide.

This was due to management interventions to optimise claim payments, improve business processes, the hiring of more staff, and a new claims administration system.

Payouts wasted on legal fees

While the rising number of claims strains the fund’s financial resources, Watson said the organisation was dealing with this by assessing and finalising claims speedily and efficiently.

The auditor-general has also recognised the fund’s prudent management of public money in the 2013/14 financial year by giving it with a second consecutive clean audit.

The Road Accident Fund board and management have mapped out plans to curb the growing deficit caused by the higher reserves needed for outstanding claims. These include discussions with the National Treasury and Department of Transport to resolve the short-, medium- and long-term funding of the organisation.

Watson said a major problem was the high contingency fees – estimated at over 25% – paid to attorneys, which exacerbated the hardship of accident victims. More than this, 21% of payments go to legal fees, with R1.7-billion spent on the fund’s legal costs and R2.9-billion on claimant’s legal costs.

“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.

New legislation to lower the cost of claims

The new Road Accident Benefit Scheme Bill will attempt to reduce the amount of money wasted on legal fees by eliminating the need to determine who was at fault, cutting out prolonged and often self-serving lawsuits.

Payments will be made directly and on a monthly basis to claimants and healthcare providers. The bill will also provide benefits for medical expenses, income support, family support and funeral benefits.

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