Road Accident Fund (RAF) to establish a new accident claims body
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2011
Wed
26
Oct
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The government recently announced that it is their intention to establish a new accident claims body, a move that is likely to result in the scrapping of the cash-strapped Road Accident Fund (RAF).
The cabinet already approved the new policy document which would see the new scheme being governed along social security principles and operate on a “no-fault basis”. It was confirmed that the proposed scheme was part of government’s wide-ranging social security system reform initiative and would mark a departure from a system based on financial compensation.
A spokesman of the Department of Transport (DoT) confirmed that the fuel levy, which is currently used to finance RAF, would be used as the primary source of funding the scheme.
It was furthermore confirmed that the actual setup costs to get the scheme up and running will be determined once implementation planning starts.
The Minister of Transport is on record of saying that the current deficit of RAF had exceeded R42 billion and that inadequate funding was making it impossible for the fund to settle its claims backlog.
The Deputy Director of the DoT said that the RAF would indeed be restructured so that it could be a proper benefit system and administrator. She also said that the DoT is not looking at immediate implementation as they will need to go through the whole legislative process to actually change the legal dispensation from a fault-based system towards a no-fault system, adding that the new system would not apply to already existing RAF claims.
A Senior Economist stated that it would take up to seven years for Government to scrap RAF.
Source: South African Insurance Association
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