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

RAF Financial Crisis Continues Despite Record Payouts

The Road Accident Fund (RAF) finds itself at a critical juncture in February 2026, as parliamentary hearings reveal the fund remains technically insolvent despite paying out a record R33.5 billion in claims during the 2025/26 financial year. This represents a significant increase from the R28.4 billion paid in the previous year, yet the fundamental structural problems plaguing South Africa’s road accident compensation system persist.

RABS Bill: A Revolutionary No-Fault System Proposed

In a major development, the transport department has thrown its support behind the Road Accident Benefit Scheme (RABS) Bill, which proposes a complete overhaul of how road accident victims are compensated in South Africa. First introduced in 2013, the bill has gained renewed momentum as authorities seek solutions to the RAF’s mounting financial crisis.

Key Features of the Proposed RABS System:

• No-fault compensation 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, regular monthly payments
• Restricted eligibility: Only South Africans and legal foreigners with insurance will qualify for compensation
• Age limitations: Claims for loss of income will be limited to people under 60 years old
• Travel insurance requirement: Foreign nationals must have travel insurance when entering South Africa

Deputy Transport Minister Mkhuleko Hlengwa emphasized that the bill aims to “introduce a no-fault system, to cap benefits, and to provide a schedule of defined benefits within the Act in order to regularise the system.”

Parliamentary Hearings Expose Deep-Rooted Problems

The Standing Committee on Public Accounts (SCOPA) hearings in February 2026 have laid bare the extent of the RAF’s challenges. Despite the increased payouts, the fund’s liabilities continue to outstrip revenue, with the “requested but not yet paid” (RNYP) liability reaching R17.8 billion by January 27, 2026.

Staggering Financial Figures Revealed:

• Total RAF liabilities exceed R600 billion
• Annual claims payments of R45-50 billion
• Approximately 25% of payments (R12.5 billion) go to attorneys under the contingency fee system
• Default judgments reached R6.6 billion in the previous year, accumulating to about R15 billion
• Road accidents cost South Africa between R205-260 billion annually

Structural Mismatch at the Heart of RAF Crisis

RAF Interim Board Chair Kenneth Brown highlighted the fundamental problem facing the fund: “People will say the Road Accident Fund is underfunded and needs more money. But if you go to Treasury with that notion, they will look at how inefficient the administration is and how money is being spent on areas that do not make sense.”

Alfredina Themba, chair of the audit and risk committee, explained the structural challenge: “From an accounting perspective, if your revenue is fixed and your costs keep increasing, you are supposed to reduce costs. But how do you reduce costs when claims come from people who are injured in accidents? We cannot stop claims from coming in.”

Governance Issues and Reform Efforts

The RAF has been operating under an interim board since August 2025, following years of governance challenges. Recent developments include:

• Legal disputes resolved: The RAF has withdrawn its costly litigation against the Auditor-General over accounting standards
• Employee suspensions: More than 50 employees remain on paid suspension for extended periods without finalized disciplinary outcomes
• Claims processing issues: The RAF 1 claim form case before the Supreme Court of Appeal could expose the fund to substantial additional liabilities

Ministry Oversight and Transparency Measures

Deputy Minister Hlengwa defended the transport ministry’s oversight approach, stating that correspondence with the RAF constitutes routine shareholder oversight rather than interference. “We are not going to allow a situation where we do not engage with our entities simply because previous styles of ministry were different,” he told SCOPA.

The Path Forward: Prevention and Reform

Minister Hlengwa emphasized that the solution extends beyond just reforming the RAF: “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.”

The transport department’s strategy includes:

• Strengthening road safety operations as preventative interventions
• Improving traffic law enforcement funding
• Building a comprehensive ecosystem approach to road safety
• Moving towards a direct claims model to reduce administrative costs

Impact on Road Accident Victims

While reforms are being debated, current RAF claimants continue to face significant delays, with settlements taking an average of five years to process. The fund currently has a backlog of approximately 320,000 claims, highlighting the urgent need for systemic reform.

Looking Ahead: Critical Decisions for 2026

As South Africa grapples with the RAF crisis, several critical decisions loom:

• Parliamentary approval of the RABS Bill
• Resolution of the RAF 1 claim form legal challenge
• Implementation of cost-containment measures
• Strengthening of governance structures
• Development of sustainable funding models

The Road Accident Fund’s challenges represent one of South Africa’s most pressing public finance issues. With road accidents costing the country up to R260 billion annually and the fund’s liabilities continuing to grow, the need for comprehensive reform has never been more urgent.

As Deputy Minister Hlengwa noted, “Shutting down RAF is not an option,” making the successful implementation of reforms crucial for ensuring that road accident victims continue to receive the compensation they deserve while creating a financially sustainable system for the future.

Stay updated with the latest developments in South Africa’s Road Accident Fund reforms and their impact on road safety and victim compensation by following our ongoing coverage of this critical issue.