That R2.18/litre you pay funding “opportunistic” RAF claims of R3bn

The beleaguered Road Accident Fund (RAF) is losing an estimated R3 billion a year to opportunistic loss of income claims from people who suffered only minor injuries in a motor vehicle accident. In this interview with BizNews, actuary and damages expert Gregory Whittaker shares his research for the Actuarial Society of South Africa (ASSA). He says statistics for the financial year ending 31 March 2021 show that loss of income settlements totalled R18.4 billion – of which about 14% was paid to those with non-serious injuries – while in the financial year ending 31 March 2023, the RAF paid R22 billion in loss of income claims.  Whittaker lists his recommendations to prevent such excessive compensation – and thus also address the worsening financial situation of the RAF where the deficit had grown, by the end of March 2022, to R344.8 billion from R3.8 billion at the end of the 1994 financial year.

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Relevant timestamps from the interview

  • 00:00 -Introduction
  • 00:28 – What does the research show in terms of figures?
  • 01:12 – Why are these claims still legally possible?
  • 03:25 – How else is the system being abused?
  • 05:31 – Comparison to Occupational Injuries Act
  • 08:14 – RAF’s dire financial position
  • 09:22 – Research recommendations
  • 11:12 – Conclusion

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Highlights from the interview ___STEADY_PAYWALL___

The beleaguered Road Accident Fund (RAF) is losing an estimated R3 billion a year to opportunistic loss of income claims from people who suffered only minor injuries in a motor vehicle accident.

This is according to research done by actuary and damages expert Gregory Whittaker for the Actuarial Society of South Africa (ASSA).

Speaking to BizNews, he says statistics for the financial year that ended on 31 March 2021 show that loss of income settlements totalled R18.4 billion – of which about 14% was paid to those with non-serious injuries – while in the financial year ending on 31 March 2023, the RAF paid R22 billion in loss of income claims. 

“My feeling is that the method that’s used to calculate these things, and the general values that you see out of the claims data, point to the compensation being excessive.”

Whittaker notes a significant increase in the number of loss of income settlements made by the RAF over the years: in the financial year ending on 31 March 2008, the RAF made 5 957 individual claims payments in respect of loss of income, whereas in the financial year ending on 31 March 2023, the RAF made 20 957 individual claims payments in respect of loss of income.

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He says a simple amendment to the Road Accident Fund Amendment (RAFA) Act of 2005 to do away with the provision that allows individuals with minor injuries to submit loss of income claims would result in a saving to the fiscus of some R3 billion a year in compensation payments.

He points out that such an amendment would also reduce by around 25% the number of RAF cases in South African courts, resulting in substantial savings in expert witness costs.

Whittaker further recommends that legislators address the “substantial mismatch” between compensation provided in terms of the Compensation for Occupational Injuries and Diseases Act (COIDA) and that of the RAF.  

His research shows that in the financial year ending on 31 March 2021, the biggest claim paid for a non-serious injury by the RAF was around 25 times the maximum claim paid under COIDA for a non-serious injury claim with a whole person impairment of 30%.

“And in terms of that regime (COIDA), the maximum payment that you can get for a non-serious injury is of the order of 300 000 Rand – and that’s if you’re 30% whole person impaired – whereas with the Road Accident Fund, we found one claim where the payout was about 25 times the maximum under the COIDA. So I think in that case, the person got about seven and a half million rand for a non-serious injury for loss of earnings.

“So I do think an important thing is just to align the act in terms of where we have no payment for general damages for non-serious injury. There needs to be some alignment with loss of income: so not necessarily doing away with loss of income altogether for non-serious injury, but I think there needs to be a more expedient system in terms of assessing the matters and making smaller payments than what are currently being made.”

Whittaker points out that such steps would also help address the worsening financial situation of the RAF where the deficit had grown, by the end of March 2022, to R344.8 billion from R3.8 billion at the end of the 1994 financial year.

He adds that the primary cause of the RAFs financial woes is the high rate of accidents in South Africa. “So I think at the source, we have a problem on our roads. It needs to obviously be far more resources directed at actually curing the problem…Once you solve that, then obviously you’ve got fewer claims and everything else is a knock-on effect.”

Whittaker also recommends the establishment of a central government body responsible for determining fair compensation to individuals, whether injured in a car accident or at their place of work. 

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