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Courts awarding more than RAF can pay

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This is why the fund is struggling to pay claims and, as a result, the net deficit of the fund is climbing sharply and will reach a staggering R206.3 billion by the end of the financial year.

RAF executives and acting chief executive Lindelwa Jabavu update media on RAF's finances. Picture: James Mahlokwane

Pretoria – The Road Accident Fund announced that it continued to struggle to pay claims due to a net deficit climbing sharply to R206.3 billion by the end of the 2017/18 financial year.

The agency told media that its legislative framework has resulted in the RAF being insolvent since 1981 and threats of attachment and removal of property remain day-to-day operational challenges.

The agency’s executives said this was all happening while attachment to the Road Accident Fund bank accounts remained equally disruptive.

Due to the financial strain, R9 billion worth of claims are in arrears on average each month because the fund is unable to pay them. 

RAF acting chief executive Lindelwa said despite every effort to steady the ship by introducing internal measures to optimise cash flow management and time periods, the core challenges is that the RAF’s dispensation is inadequately funded and remains unreasonable, inequitable, unaffordable and unsustainable.

She said it was for that reason that the Department of Transport has proposed an overhaul of the RAF’s current compensation system through the Road Accident Benefit Scheme (Rabs).

RAF officials said the fuel levy it received was crucial to paying claims and over 90% of that fund served that purpose every month. 

However, although the RAF was receiving over R3.5 billion from treasury through the fuel levy, the courts were settling claims amounting to at least R4 billion every month. 

That means that RAF was receiving less money than the money it needed to pay in claims.