Market Indicators
RAF moves deeper into the red
The Road Accident Fund's liabilities exceeded its assets by R42.3 billion on March 31, 2010, meaning it is technically insolvent, according to Financial Services Board 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 to R11.4 billion. Total income was R12.684 billion.
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 percent 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 percent 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 R23 million (R15 million 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.
By limiting liability for loss of income and support, the system was more reasonable, equitable and sustainable, as the risk of extremely large claims by foreigners had been removed, he said.
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