RAF struggling financially
According to an official statement from Chief Executive Officer, Dr Eugene Watson, the RAF faces on-going financial difficulties. The money derived from the fuel levy (currently at 154 cents per litre) is insufficient to cover the claims that need to be settled each month. As a result, the fund is sitting with a backlog of unsettled claims.
According to the National Treasury’s Budget Review in 2015, the RAF’s long-term liabilities are estimated at R98,5 billion and are projected to grow at 15 percent each year. Even with additional funding, this is unsustainable.
The RAF was given a bail-out by the Treasury, in the form of a 50 cent per litre increase to the fuel levy, in 2015. However, this hasn’t been significant enough to bridge the gap in the fund’s finances.
At present the RAF fuel levy equates to around R3 billion per month.
Compare this to the value of claims that need to be settled each month and it’s clear there’s a significant problem. For the month of November 2015, for example, the RAF owed R10,79 billion to claimants and service providers.
Delays in settlement of RAF claims
Further delays in the settlement of claims are caused by the RAF’s fault-based system.
Under the current system, it’s necessary to determine the percentage of each driver’s liability for an accident before the RAF determines the compensation to award a claimant. This makes processing claims a lengthy process.
The result is claimants frequently having to wait months (and even years) just for investigation of their claims to be completed.
Another issue with the current RAF policy is that claims of R100,000 or less are paid out first, meaning that those entitled to large settlements from the fund will have to wait the longest to be paid. In fact, claimants owed settlements exceeding R100,000 can expect to wait six to nine months for payment.
Sometimes this means that those who need the cover most are the last to get it.
What’s in store
A further increase in the fuel levy is likely, and this may help bolster the RAF’s coffers. In addition, the RAF has proposed a long-term solution in the form of the Road Accident Benefit Scheme (RABS). It’s hoped that this will speed up the claim settlement process.
If the RABS goes ahead, the RAF will no longer assign percentages of liability and calculate payouts accordingly. Instead, the fund will focus on providing immediate support to claimants, in the form of monthly payments.
What you can do for now: securing RAF payments
The best way to secure a fair, reasonably timely settlement from the RAF is to use the services of an experienced attorney, who can negotiate with the RAF on your behalf.
At DSC Attorneys, all our attorneys are highly experienced in personal injury law and offer many years of combined experience in handling Road Accident Fund claims.