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RAF post healthy results despite fraud and other challenges!

The RAF paid out in excess of R12 billion during the financial year compared to R6.2 billion six years ago.

The average settlement amount per claim increased by 16.6% to R54,808 in 2012 (2011: R46,995), but the number of finalised claims reduced to 149,467 (2011: 187,168).

This was the annual report the Road Accident Fund presented to Parliament this week.

Despite facing enormous challenges, RAF is still striving to help and advise those involved in road accidents to approach  them rather than using the legal route, which may result in prolonged issuing of payment.

RAF has now been actuarially insolvent for over three decades, yet it continues to honour its obligation to claimants, as can be seen by the R12 billion paid out towards claims in the last financial year.

According to Dr Eugene Watson CE at RAF, it is important to bear in mind that when the road accident scheme of arrangement was implemented almost 60 years ago, the focus was on protecting a vehicular wrongdoer from being sued and even at this stage the choice of funding the arrangement was based on an accessible fuel levy, rather than on the extent to which wrongdoers had to be protected.

“Structurally, the scheme of arrangements has remained structured and funded in the same way as it has for the last three decades and it is clear that now is the time to commence a realignment of the RAF’s legislative and funding arrangements to cater for the social mandate in a sustainable, economic and efficient manner.

The 2011/12 Integrated Annual Report provides the necessary supporting information to inform these changes.”

A great deal of work has been performed by the Fund to reduce the volume of historic claims, to the extent where the backlog of open claims is almost half of what it was in 2005 and 2006 – down from a high of 400,000 claims.

A number of initiatives have been put in place to encourage road accident victims to claim directly from the RAF as this is a more cost-effective and less time-consuming modality.

To encourage public participation, RAF has embarked on national campaigns to educate claimants on what, how and where to get in contact with them, despite insufficient funding challenges, substantial claims backlog and an increase in the provision for outstanding claims, and increase on the  net deficit, amongst others.

A net deficit of over R46 billion has been reported and presently, the annual revenue from fuel levies now exceeds R16.9 billion, as a result of an 8 cents per litre increase in the RAF Fuel Levy and an increase in the volume of fuel sold over the previous calendar year.

With fraud on the rise, the Fund currently holds cash reserves of R4.2 billion as a consequence of the nature and volume of claims received and processed, thus management interventions have been implemented to expedite the payment of claims and this cash reserve is likely to reduce in the short term.  No time frames were given.

According to Watson, attention is being placed on the identification of sustainable funding mechanisms which are related to the benefits provided by the Fund,clarifying what benefit is available to claimants, and determining who may claim for compensation.

This is necessary to ensure that the RAF and the commitment of Government to support and compensate victims of road accidents remain sustainable. There will need to be a careful balancing of equitable access and the benefits provided,” he says.

Despite these challenges, RAF achieved an unqualified audit report from the Auditor-General, and capacitation of the RAF Procurement environment, and the Investment Policy has been maintained, more than 29,000 claims originated, over 440 mass funerals attended to and in excess of 13,000 patients receiving continuous care at home.

Community members are assisted with RAF claims procedures, claims settlements are made on the spot, medical undertakings certificates are issued, status updates are provided, and potential claimants are encouraged to lodge their claims directly with the RAF.

Furthermore, there has been a conscious improvement in customer-centricity, at enhancing the Fund’s accessibility and visibility, were introduced. RAF employees took to the road to bring the organisation’s core service offering directly to communities across the country.

In the 2012 financial year, the finalisation of the Road Accident Benefit Scheme (“RABS) with regard to legislative enablement, initiated in 2011 was published.

 With the Department of Transport’s policy to move a no-fault benefit scheme, this has been welcomed by the agency, meaning the public would be provided with reasonable, equitable, affordable, and sustainable scheme.

Some members of the public we interviewd said, although the burning question of prolonged accidents settlements still continued unabatedly, they still have confidence in the agency.

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