Road Accident Fund Crisis Deepens: Major Reforms Proposed as RAF Remains Insolvent Despite R33.5bn Payouts

RAF Financial Crisis Continues Despite Increased Payouts

The Road Accident Fund (RAF) remains in a critical financial state despite paying out a record R33.5 billion in claims during the 2025/26 financial year, up from R28.4 billion the previous year. During recent parliamentary hearings with the Standing Committee on Public Accounts (SCOPA), the RAF’s interim board confirmed that the fund remains technically insolvent with liabilities continuing to outstrip revenue.

New RABS Bill Proposes Revolutionary Changes

The transport department has thrown its support behind the Road Accident Benefit Scheme (RABS) Bill, which aims to completely overhaul how road accident victims are compensated in South Africa. First introduced in 2013, the bill proposes several significant changes:

Key Features of the RABS Bill:

• No-fault system: Victims will no longer need to prove who caused an accident to receive compensation
• Monthly payments instead of lump sums: The current system of one-off payments will be replaced with smaller monthly annuity payments
• Restricted eligibility: Only South Africans and legal foreigners with insurance will be eligible for claims
• Age limitations: Claims for loss of income will be limited to people under 60
• Travel insurance requirement: Foreign nationals must have travel insurance when entering the country

RAF’s Staggering Financial Burden

Deputy Transport Minister Mkhuleko Hlengwa revealed that road accidents cost South Africa between R205 billion and R260 billion annually, placing immense pressure on the RAF. The fund’s current liabilities are estimated to exceed R600 billion, with the “requested but not yet paid” (RNYP) liability standing at R17.8 billion as of January 27, 2026.

Administrative Costs Under Scrutiny

Interim board chair Kenneth Brown highlighted concerning administrative expenses, revealing that approximately 25% of the RAF’s R45-50 billion annual claims payments go to attorneys under the contingency fee system. This amounts to roughly R12.5 billion spent on administration alone.

SCOPA Hearings Reveal Systemic Issues

The parliamentary inquiry has exposed numerous governance failures within the RAF:

Key Issues Identified:

• Default judgments: R6.6 billion in default judgments in the previous year, accumulating to approximately R15 billion
• Employee suspensions: More than 50 employees on paid suspension for extended periods without finalized disciplinary outcomes
• Legal disputes: The RAF has withdrawn its costly litigation against the Auditor-General over accounting standards
• Claims backlog: Approximately 320,000 claims are currently backlogged

No Easy Solutions in Sight

In a frank admission to parliament, RAF interim board chairperson Kenneth Brown stated that the board had “no idea” how to fix the organization’s solvency problems. Chairperson of the audit and risk committee, Ntina Themba, appealed to Parliament for help in rethinking the funding model, admitting: “There’s no solution. I don’t even want to lie.”

Funding Model Challenges

The RAF relies heavily on the fuel levy for income, but there’s a significant mismatch between contributions and benefits paid to road accident victims. Brown emphasized that simply raising the fuel levy is not the answer, as Treasury would scrutinize the fund’s inefficient administration and questionable spending.

Reform Focus on Prevention

Deputy Minister Hlengwa stressed that reforms shouldn’t be confined to the RAF alone but should focus on building an ecosystem that prevents accidents from occurring in the first place. The transport department’s primary responsibility includes funding traffic law enforcement and strengthening road safety operations as preventative interventions.

Executive Oversight Under Question

The ministry of transport appeared before SCOPA to address allegations of ministerial interference in the RAF’s operations. Deputy Minister Hlengwa defended the department’s correspondence with the RAF as routine shareholder oversight rather than interference, stating that the same approach applies across all entities under the department’s portfolio.

Looking Ahead: Urgent Need for Comprehensive Reform

The RAF crisis highlights the urgent need for comprehensive reform of South Africa’s road accident compensation system. With liabilities exceeding R600 billion and no clear solution in sight, the proposed RABS Bill represents a potential lifeline for the struggling fund.

However, the success of any reform will depend on addressing the underlying issues of road safety, administrative efficiency, and sustainable funding models. As Minister Hlengwa noted, “We are not looking at reforms confined only to what happens within the RAF. We are asking how we can build an ecosystem that prevents accidents from occurring in the first place.”

Key Takeaways:

• RAF remains insolvent despite record R33.5bn payouts
• RABS Bill proposes shift to no-fault system with monthly payments
• Administrative costs consume R12.5bn annually
• 320,000 claims currently backlogged
• Comprehensive reform needed beyond just RAF restructuring

The Road Accident Fund crisis continues to be one of South Africa’s most pressing financial challenges, requiring urgent attention from policymakers, stakeholders, and the public to ensure sustainable compensation for road accident victims while maintaining fiscal responsibility.