Mbalula hails interventions at RAF as a resounding success
The fund has been bleeding money for years, as it struggled to keep up with an increase in road accident claims both legitimate and fraudulent.
CAPE TOWN - Transport Minister Fikile Mbalula has on Monday hailed the recent interventions at the Road Accident Fund (RAF) as a resounding success.
The fund has been bleeding money for years, as it struggled to keep up with an increase in road accident claims, both legitimate and fraudulent.
At one stage, the RAF's liability stood at R322 billion.
Mbalula said the entire model of the RAF was floored, centring on litigation, with 99% of the claims settled just before trial.
"RAF over the years was a homeless ground and everyone did as they wished. There was no board and we had to appoint our own."
He's now confident that they're regaining control of the situation.
For a start, they've slashed administrative costs by more than R7 billion in the 2020/2021 financial year and they've seen an increase in investment of about 152% year-on-year.
“For the first time in many years, it has posted a surplus of R3.2 billion. This is a dramatic shift from a R5.2 billion deficit from the previous year.”
The surplus and the extensive cost-cutting will go some way to turning around the RAF, which up until this point has been one of the biggest problems faced by the fiscus in terms of liability, second only to Eskom.
BACK ON TRACK
Mbalula believes the RAF is on its way to getting back on track.
The RAF collects R43 billion a year through the fuel levy, of this, only R26 billion is spent on the actual compensation of claimants.
The remaining four cents in every rand goes to administrative costs, much of it on legal fees and some on medical costs.
CEO Collins Letsoalo said they were focused heavily on bringing these categories of costs down.
“We have been paying five times what medical aids are paying and we have brought in a new way of dealing with these medical costs by bringing RAF back to the market by lowering those medical costs.”
They've also identified and reported 102 law firms to the Legal Practice Council for allegedly not repaying duplicate payments made into their trusts accounts by RAF.
Letsoalo said they had also decided not to proceed with a legal panel, which would have costed about R3.6 billion a year.
REDUCING THE LIABILITY OF THE ROAD ACCIDENT FUND|Mr Fix (@MbalulaFikile) June 7, 2021
We are on the right path and we will continue to work towards a sustainable and equitable road accident benefit scheme. pic.twitter.com/Q68u5yyjeQ
[REDUCED ROAD ACCIDENT FUND LIABILITY]The Road Accident Fund (@RAF_SA) June 7, 2021
This has resulted in the massive decrease of the RAF reported liability by R305 billion, bringing the RAF liability to R28 billion and the net liability position to R13.5 billion. @MbalulaFikile pic.twitter.com/qaF6XUIRR6