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Cape Town - The Road Accident Fund's (RAF's) liabilities exceeded its assets by R42.3bn on March 31 2010, meaning it is technically insolvent, according to a Financial Services Board (FSB) report tabled in parliament.
The fund's accumulated deficit increased by 6.3% in the 2010 financial year, compared to an increase of 43.6% in 2009 and 37.4% in 2008.
According to the report, tabled by FSB executive officer Dube Tshidi, claims paid increased 2.21% in the 2010 financial year to R11.4bn. Total income was R12.684bn.
At the beginning of the year there were 261 390 outstanding claims, while new claims totalled 209 981. A total of 262 185 were finalised, leaving 209 186 outstanding claims as at March 31 2010.
Of this total, 36% were outstanding for less than a year, 34% between one and two years, 15% between two and three years, and 15% were outstanding for longer than three years.
However, the RAF had continued to reduce the backlog of outstanding claims by 20% from 2009 through settling a high number of small claims, reducing the time within which claims were processed, and paying medical and other service providers directly.
While the auditor general gave the RAF an unqualified opinion in 2010, he nevertheless drew attention to the fact that the RAF had incurred fruitless and wasteful spending of R23m (R15m the previous year) in respect of sheriff and interest costs due to delays in paying claims.
Tshidi said to ensure sustainability of the system and reduce abuse, caps were being placed on claims relating to loss of income and loss of support as well as general damages.
Limiting liability for loss of income and support made the system more reasonable, equitable and sustainable, as the risk of extremely large claims by foreigners had been removed, he said.
The fund's accumulated deficit increased by 6.3% in the 2010 financial year, compared to an increase of 43.6% in 2009 and 37.4% in 2008.
According to the report, tabled by FSB executive officer Dube Tshidi, claims paid increased 2.21% in the 2010 financial year to R11.4bn. Total income was R12.684bn.
At the beginning of the year there were 261 390 outstanding claims, while new claims totalled 209 981. A total of 262 185 were finalised, leaving 209 186 outstanding claims as at March 31 2010.
Of this total, 36% were outstanding for less than a year, 34% between one and two years, 15% between two and three years, and 15% were outstanding for longer than three years.
However, the RAF had continued to reduce the backlog of outstanding claims by 20% from 2009 through settling a high number of small claims, reducing the time within which claims were processed, and paying medical and other service providers directly.
While the auditor general gave the RAF an unqualified opinion in 2010, he nevertheless drew attention to the fact that the RAF had incurred fruitless and wasteful spending of R23m (R15m the previous year) in respect of sheriff and interest costs due to delays in paying claims.
Tshidi said to ensure sustainability of the system and reduce abuse, caps were being placed on claims relating to loss of income and loss of support as well as general damages.
Limiting liability for loss of income and support made the system more reasonable, equitable and sustainable, as the risk of extremely large claims by foreigners had been removed, he said.
