Road Accident Fund in financial straits

Road Accident Fund in financial straits

2012-09-12 17:35

Cape Town - The beleaguered Road Accident Fund (RAF) remains technically bankrupt, according its latest annual report tabled in Parliament.

The fund's financial position cast doubt on its ability to operate as a going concern, Auditor General Terence Nombembe (AG) said in a two-page assessment in the report.

"The Road Accident Fund incurred a net loss of R16.487m during the year ended 31 March 2012 and, as of that date, the entity's total liabilities exceed its total assets by R46.395m," he said.

The AG cited a lack of internal controls to curb the wasting of taxpayer money.

"Management have not implemented adequate processes to prevent and detect fruitless and wasteful expenditure."

An additional concern raised was that 47% of the RAF's targets were not achieved.

CEO Eugene Watson, who was appointed in July, also raised concerns about the financial situation in his overview of the annual report.

"The fund recorded a deficit of R16.5bn in the financial year under review compared to a net deficit of R1.5bn in the previous year," said Watson.

He said the deficit was directly linked to the growth in provision for outstanding claims.

Outstanding RAF claims of R34bn had jumped to R54bn.

Watson said long-term funding models were being considered as contributions, via the fuel levy, were not meeting claim costs.

"In the short and medium term, government will need to consider interim legislative changes to ensure that inefficiencies in the current compensation system are minimised and contained."

The report highlights the negative effect on tens of thousands of claimants, some with serious injuries and who were unable to work.

They would continue to wait several years for their claims to be settled, according to the report.
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  • larry.piggott1 - 2012-09-12 17:42

    Thats what you get when there is incompetence, Corruption and Greed invloved.

      thando.gqabaza - 2012-09-12 19:20

      If they are so cash strapped , how come all their IT staff went to India for training which could have been done locally ?

      cherry.tcmr - 2012-09-13 09:25

      True Thando. the trainer could have come here

  • justin.pretorius - 2012-09-12 17:53

    What happened with all the taxes that are screwed out of us??

      dean.mark.williams - 2012-09-12 18:59

      exactly, don't the funds come out of the fuel we buy?

  • croix.mactee - 2012-09-12 18:44

    Time to squash these roaches and stop the rot. NOW!

      thepatrickwinter - 2012-09-12 19:31

      Agreed, need to hit them where it hurts, but how do you revolutionise a collective tax boycott. Imagine the response if someone did a JuJu at the SARS office.

  • enlightened.bowman - 2012-09-12 18:47

    Is there anything at all that is not in financial trouble in this place? That'll be excluding Those that are "connected"and Eskom. I base the latest on the bonuses these unspeakable characters hand out to one another

  • Don.Tandy - 2012-09-12 19:00

    Anarchy Nepotism Corruption

  • thepatrickwinter - 2012-09-12 19:27

    I dont remember seeing a report that was a success story with this lot.

  • clinton.bowden1 - 2012-09-12 19:41

    Hardly surprising. Given the amount of corruption but then one also has to ask why are there so many claims. The fat metro porkers are only interested in speed trapping for revenue. If traffic metro porkers actually did some real work the roads would be safer and the number of claims would be less. This can only have the effect of easing the financial burdens on the RAF.

  • eric.rautenbach.5 - 2012-09-13 06:36

    Very poorly written article, and it is obvious that no investigation was done at all. The Road Accident Fund is a unbelievable entity. Do yourself favor and go the North Gauteng High Court on any given day. Out of the 130 odd cases on the roll for the day roughly 110 - 120 of those are RAF related. No one will be able to comprehend the scale of the RAF unless you are involved in it. Millions and millions of rands are payed out on daily basis to help seriously injured people, or families who have lost loved ones. With regards to the deficit > its a fairly simple concept to explain, summons is issued against the fund for eg. R2.5 million. Then after proper investigation via medico legal experts the claim is quantified by both parties ( the plaintiff's attorneys and the RAF's panel attorneys. Then the matter proceeds on trial and in most cases the matter is settled, often for less than 1 tenth of the summons amount. Therefore if the fund were to pay out every single claim for the claimed amount there would be a negative deficit, but that will never happen. As for the delays in settling the claim, its often not the RAF's fault, but other factors such as the availability of experts such as orthopedics', neurosurgeons, industrial psychologists, all appointed in an attempt to ensure that the plaintiff's rights are fully protected and that the plaintiff receives the best possible settlement.

      liezl.sadler - 2012-09-14 10:09

      Why wait to settle the matter on the steps of the Court. Back in my day claims handlers had to make offers and settle matters within 6 months of lodgement. That where all the money goes to LITIGATION!! Unfortunatley RAF management has not figured this out yet.

      calin.doliveira - 2012-09-18 08:15

      Ha my case has been dragged out over 4 years already and myself and family have nothing after the crash. It caused me severe injuries and disability. My attorneys do everything in good time but still it is being dragged out by RAF.

      Mark Green - 2013-09-28 15:55

      Mr. Rautenbach is right. So is Ms Sadler right about the claims being "settled on the steps", but often those are the frivolous (even fraudulent) claims that should never have been lodged. The claimants" attorneys with any integrity must have known that they were not going to win those cases. They then settle for costs, so that they still get their fees, which they have greatly inflated by stringing a claimant along after getting their proxy and carte blanche to do whatever they like, in their name. It would be brilliant if the judge could see through the frivolous claims and prevent said attorneys from getting any payment at all from the RAF, or the claimant. The honest claimants and the honest attorneys suffer because of the attempts by the dishonest ones to rob the RAF and the necessity to investigate. To cite 2 examples, I once investigated an accident with 17 people involved (1 car and 1 taxi). No one was hurt, except for bumps and bruises, but there were 51 claims for that accident. There are touts that obtain the accident reports from police friends and locate "victims" which then go to get doctors' reports (sometimes being driven there in a taxi with the other victims). Another "pedestrian accident" turned out to actually be a building accident after some enquiries were made. I doubt that the claimants are always the ones who think of these schemes on their own and sometimes it turns out they didn't even know what was being claimed on their behalf, as they just signed some forms when they were promised a couple of grand. Another problem in SA is the tendency for breadwinners to migrate. They then have dependents in different areas, all of whom are entitled to compensation when the breadwinner dies in an accident, but often they are not all known of, or admitted to, by other dependents who want all the compensation, without sharing. Of course the claims have to be investigated. Even if they do away with the current "fault based" system, it will still be necessary to confirm several factors by investigation.

  • Zahir - 2012-09-13 07:30

    The anc have expert ability to make billions disappear into thin air the cadres are very busy

  • denzil.small - 2012-09-13 07:41

    Whats new?

  • andre.stols.581 - 2012-09-13 08:19

    Maybe it is time for the government to call it a day on this type of Insurance cover, which clearly they and all involved are incapable of handling.I would suggest that they get together with some actuaries at Insurance Companies and transfer the handling of this risk to Insurers,then take away the fuel levy and then the public must insure this risk themselves via normal Insurers and pay a monthly premium upon it.

  • Bradlloyd07 - 2012-09-13 08:38

    There are too many vultures feeding oof this fund; notably lawyers. Approximately 30% of funds pay out go to lawyers of claimants. Fix the procedures, lower the payouts and eliminate the middlemen and the claimants will be better-off, fund pays out less per claim but more to clsimant; legal fees of fund get slashed. then its down to basic common sense business/cash management. Politics etc are biggest hurdle and handicap.

  • cherry.tcmr - 2012-09-13 09:35

    The vultures here have been the advocates overbilling RAF. Some of them had to pay back millions. the are case scenario are the foreigner tourist who claim in euros, then off course the corruption too

      liezl.sadler - 2012-09-14 10:12

      Approximately 120 matters goes to Court everyday, that equals 120 Advocates to be paid per day. If one overreaches by charging for 6 trials - how possibly can the RAF be worse off?? Simple math.

  • richard.whitby.182 - 2012-09-13 09:59

    Well, quite honestly, if the government and law enforcement enforced a law that would require all road users to have comprehensive insurance and all taxis/mini busses and public transport to have public liability insurance, then 2 things would happen. 1) There would be no need for the road accident fund 2) Insurance premiums (which are said to be high in South Africa) would be dramatically reduced

  • daniel.ledwaba.5 - 2012-09-26 19:58

    That is nothing but lot of bull rubbish. The truth is that one cannot measure with certainty what the liability of the RAF is. There is no way the RAF can ever settle all its claims in one day. The continous use of the flawed estimation of claim contribute to all these lies and it appears that the portfolio committee on transport is constituted by dumbs who cannot think and apply their minds to facts. Even the auditor general have no clue what he is doing in this regard. It is so funny that graduates with MBAs failed dismally to see where the problem is. The RAF can be ran by a mind of a candidate attorney and he can save much on litigation than what these useless doctor CEOs. How can one become Chief Operating Officer after failing so much as Chief Financial Officer?

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