How much the SA road fund pays out for the average accident claim

The Road Accident Fund (RAF), the public entity which compensates people injured in road accidents in South Africa, has reported a 46% rise in revenue for the 2015/16 financial year, to R33.2 billion.

This, it said, is despite having to cope with a legacy plagued by complex and legalistic hurdles, spiralling costs, insufficient funding to pay claims, and long standing insolvency.

A spiralling deficit of R143 billion directly related to the provision for outstanding claims on hand and still to be received, meant that liabilities exceeded assets by R145 billion, RAF said.

The fund said that claims liabilities increased by 33% to R154 billion from R116 billion in the previous financial year.

It said that the average value of a claim paid increased by 24% from R114,969 to R143,127, while claims processing improved by 15% to R32.3 billion.

The RAF said that the average claimant legal and other costs paid per claim increased by 33% from R90,563 to R120,385.

It added that the average RAF legal and other costs paid per claim increased by 32% from R21,564 to R28,476.

Additional highlights of the work conducted in 2015/16 include the following:

  • A total of 188,864 new claims were received and 188,759 were finalised. In comparison: 173,174 claims were registered and 183,933 finalised in 2014/15; 147,168 and 240,783 respectively in 2013/14; and 150,312 and 162,130 in 2012/13.
  • Despite an increase in new claims being received the RAF managed to attend to all of these and still reduce the balance of open and unfinalised claims slightly to 217,000 claims, with a noticeable reduction in older claims remaining open.
  • During the year under review, the RAF finalised an average of 715 claims each working day of the year compared to 697 in the previous year.
  • Total revenue increased by 48% to R33,2 billion from R22,7 billion in the previous financial year as a result of a 50 cent per litre increase in the RAF Fuel Levy and minimal increase in the volume of fuel sold over the previous year.
  • Total expenditure for the year, excluding the increase in the provision for outstanding claims, increased by R4.3 billion to R34.2 billion (2014/15: R29.7 billion) as a result of improved productivity in claims settlements and higher claims costs.
  • Claims expenditure – excluding the provision for claims incurred – of R32.3 billion accounted for 94% of total expenses, with the balance being made up of employee costs, i.e. R1.28 billion (4%) and administration and other costs, i.e. R618 million (2%).
  • Effective financial management saw larger sums of money managed in an effective manner with an improvement in internal controls and unqualified audit opinion obtained.
  • 13,4% of overall expenditure went to legal fees, from a high of 29% five years ago. The RAF would still prefer that this money is spent on taking care of car crash victims, rehabilitation and other post-crash care expenses.
  • A total of R424 million worth of fraudulent claims were identified before payment was made and 391 people were arrested with 231 convicted for fraud against the RAF.

The accident fund said that of the individual claim payments/settlements made per category:

  • R1.2 billion was paid in medical costs;
  • R120 million was spent on funeral costs;
  • R6.6 billion was spent on legal and other expert costs;
  • R8.7 billion was paid in general damages – primarily to persons not seriously injured; and
  • R16.4 billion was paid for loss of earnings and support for those who qualified.

The RAF said that while the extra R10 billion revenue boost alleviated some of its immediate challenges, it does not solve the reality that the Fund is still short of sufficient cash to honour all finalized claims and this is exacerbated by the fact that the fuel levy remains flat at 154 c/l of fuel sold in 2016.

Beyond the money, the value of the fund’s claim payments has touched lives, evidenced by the fact that over 8,414 funeral claims were paid by the RAF in the year under review (in the context of 14,000 road fatalities per annum).

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

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How much the SA road fund pays out for the average accident claim