Road Accident Fund in Crisis: Landmark Court Rulings, R400bn Debt Bomb & Calls for Reform (May 2026)

The Road Accident Fund (RAF) continues to dominate South African headlines in 2026, facing a perfect storm of landmark court rulings, a deepening financial crisis, parliamentary scrutiny, and urgent calls for systemic reform. From a Supreme Court of Appeal (SCA) ruling that extends compensation rights to undocumented foreigners, to warnings of a R400–R500 billion debt threatening the national fiscus, here is a comprehensive roundup of the latest developments surrounding South Africa’s beleaguered state insurer.

1. Landmark SCA Ruling: RAF Must Compensate All Road Accident Victims — Including Undocumented Foreigners

In one of the most significant legal developments of 2026, the Supreme Court of Appeal (SCA) ruled in April that the Road Accident Fund must compensate all road accident victims in South Africa — regardless of their immigration status.

The case arose after the Gauteng High Court in Pretoria struck down a RAF directive requiring foreign nationals to prove legal presence in South Africa at the time of injury. The RAF appealed, arguing that undocumented foreigners should be excluded from its compensation scheme to prevent fraud and avoid conflict with the Immigration Act.

A three-judge SCA panel, led by Judge Norman Davis, dismissed the appeal with costs. The court found that the RAF Act makes no exclusion based on immigration status, and that the phrase “any person” in the Act includes all road accident victims — citizens and undocumented foreigners alike.

“These accidents don’t discriminate in respect of the victims thereof between race, gender, age or between illegal foreigners and citizens of this country.” — Judge Norman Davis

The ruling was welcomed by the Parliamentary Transport Committee Chairperson, who stated that RAF funding is intended for victims of road accidents and that no one should be excluded based on nationality.

2. RAF Dealt Twin Blows by the SCA: Post-Judgment Interest and Hospital Debt

The SCA handed the RAF two further defeats in March 2026, both with significant financial implications for the already cash-strapped fund.

Case 1: Automatic Post-Judgment Interest

In RAF vs Sheriff of the High Court, Pretoria East and Others, the SCA ruled unanimously that the RAF is obliged to pay interest on late judgment debts automatically — even when the original court order is silent on the matter. The court confirmed that under the Prescribed Rate of Interest Act, every judgment debt bears interest from the day it becomes payable, as a matter of law. The RAF’s arguments that a 1997 legislative amendment had displaced this mechanism were firmly rejected.

Case 2: Sunshine Hospital’s Unpaid Invoices

In Newnet Property (Pty) Ltd t/a Sunshine Hospital vs The Road Accident Fund, the SCA reversed a Pretoria High Court ruling and ordered the RAF to pay a private hospital that had accumulated over R403 million in unpaid invoices after the RAF stopped paying in March 2020. The court went further, directing the RAF’s acting CEO by name to ensure compliance — a reflection of the judiciary’s dwindling patience with the fund’s institutional non-compliance.

3. The R400–R500 Billion Debt Crisis: SA’s Next Big SOE Catastrophe?

The RAF’s financial position has been described as nothing short of catastrophic. According to the National Treasury’s 2026 Budget Review, the RAF’s long-term provisions are expected to rise from R387 billion in the current financial year to R426 billion by 2028/29. Some analysts put the total contingent liability even higher — potentially exceeding R500 billion.

Key financial facts:

• Current liabilities stand at approximately R100 billion
• The RAF receives roughly R50 billion per year from fuel levies
• Overheads consume approximately R7 billion, leaving about R43 billion for claims
• The fund has more than 430,000 outstanding claims, some dating back over a decade
• The RAF now processes only 70,000 claims per year, down from 250,000
• Legal fees per claim have quadrupled, and the value per claim has risen by 70%
• The RAF has accumulated more than R15 billion in default judgments

SCOPA Chairperson Songezo Zibi described the situation bluntly: “The RAF is technically insolvent.” He warned that the fund faces an “avalanche” of claims, and that resolving the crisis is “like unravelling spaghetti.”

The RAF’s primary income source — the fuel levy — currently stands at R2.25 per litre (from April 2026), having risen from 41.5 cents per litre in 2008. Despite this increase, it remains woefully inadequate to cover the fund’s mounting obligations.

4. SCOPA’s Damning Report: The 2022 Claims Form Debacle

The Standing Committee on Public Accounts (SCOPA) has issued stark warnings about the RAF’s controversial 2022 claims form (RAF 1 Form), which significantly overhauled the claims process.

Key findings from SCOPA’s draft report include:

• The 2022 RAF 1 Form made the claims process largely inaccessible to ordinary claimants
• The form is complex, costly, and requires specialised reports — effectively preventing direct claims without attorney assistance
• The form is available only in English, further excluding vulnerable claimants
• The number of registered claims dropped significantly after the new form was introduced
• The change increased litigation rather than reducing it
• The former board “rubber-stamped” decisions by executive management without proper scrutiny

ActionSA MP Alan Beesley warned: “We need to highlight the risk that is real. It makes me so cold. We talk about R500 billion.” He called for punitive action against the former board and former CEO Collins Letsoalo, under whose tenure the form was changed.

SCOPA also warned that if the RAF is unsuccessful in defending the 2022 form in court, it could face a massive influx of reinstated claims, with potentially catastrophic financial consequences.

5. Governance Failures and the Letsoalo Legacy

Much of the RAF’s current crisis has been attributed to the tenure of former CEO Collins Letsoalo (2020–2025), who was placed on special leave in May 2025 pending a Special Investigation Unit (SIU) probe.

A litany of governance failures has been documented:

• Letsoalo earned R6 million per year plus a 40% performance bonus — despite five consecutive years of disclaimed or adverse audit opinions from the Auditor-General
• The SIU uncovered RAF bank accounts with between R1 million and R100 million in undisclosed funds
• A 200-bed Johannesburg hospital closed in May 2025 after the RAF failed to pay over R300 million in outstanding debt
• A whistleblower alleged senior executives manipulated procurement processes and split invoices to bypass approval limits
• The RAF hosted a R4 million staff party, including R40,000 spent on executive drinks
• The RAF litigated against the Auditor-General for two years
• Letsoalo snubbed Parliament and defied a subpoena to appear before SCOPA

In August 2025, Transport Minister Barbara Creecy dissolved the entire RAF board and appointed an interim board. She also wrote to President Cyril Ramaphosa requesting an expanded SIU investigation scope.

6. Calls for a Hybrid Reform Model: What ASSA Recommends

The Actuarial Society of South Africa (ASSA) released a major research paper in April 2026 proposing a hybrid compensation model to replace the current failing system.

ASSA’s research compared three systems:

1. The current RAF system
2. The proposed no-fault Road Accident Benefit Scheme (RABS)
3. Compulsory third-party insurance offered by private insurers

The conclusion: none of these systems is viable on its own. ASSA recommends a hybrid solution combining elements of all three, potentially structured as:

• Basic no-fault benefits for medical care and rehabilitation
• Supplemented by fault-based liability insurance for additional damages
• Delivered through a public-private partnership involving the RAF and private insurers
• All under strong regulatory oversight

SCOPA has also proposed immediate practical steps: finalising matters without going to court, appointing arbitration panels for unresolved cases, and establishing independent medical panels to assess injuries — eliminating the current costly practice of paying for two sets of medical experts.

7. Court Backlogs and the Access to Justice Crisis

The RAF’s dysfunction is creating a severe access-to-justice crisis in South Africa’s courts. In Gauteng alone, courts deal with approximately 300 RAF matters per week, each taking about a day — but there are only 25 state attorneys to handle this workload.

A mandatory mediation directive intended to reduce court backlogs has been blamed for worsening delays, with Advocate Justin Erasmus of the Personal Injury Plaintiff Lawyers Association lodging a High Court application to set it aside. If you need a trial date in Gauteng today, the earliest available slot is reportedly November 2033.

One attorney described the human cost: “Personal injury plaintiffs are being denied access to justice. My firm received 2% of what the RAF owes our clients in February.”

What Happens Next? The Road Ahead for the RAF

The RAF faces a convergence of crises that will require urgent, multi-pronged intervention:

• Legislative reform is being explored to cap payouts for future loss of income and medical expenses, and to shift from lump-sum to staggered payments — but new laws are unlikely before 2027
• The SIU investigation into Letsoalo’s tenure is ongoing, with Parliament pushing for faster results
• A High Court challenge to the mandatory mediation directive comes to court in June 2026
• SCOPA’s final report is expected to include recommendations for punitive action against former leadership
• The question of whether to increase the fuel levy further — or seek direct taxpayer funding — remains politically unresolved

As SCOPA Chairperson Songezo Zibi warned: “You have layer on layer of problems. The fiscus can’t deal with that.”

Frequently Asked Questions About the Road Accident Fund (RAF)

What is the Road Accident Fund (RAF)?

The Road Accident Fund is a South African state entity that provides compulsory cover to all road users in South Africa against injuries or death caused by the negligent driving of motor vehicles. It is funded primarily through a fuel levy paid by motorists.

How do I claim from the Road Accident Fund?

To claim from the RAF, you must submit a completed RAF 1 claim form along with supporting documentation including a medical report, accident report, and proof of identity. Due to the complexity of the current 2022 form, it is strongly recommended to seek the assistance of a personal injury attorney.

Is the Road Accident Fund bankrupt?

The RAF is considered technically insolvent, with total contingent liabilities estimated at between R400 billion and R500 billion. While it continues to operate and pay claims, it faces a severe liquidity crisis and has a backlog of over 430,000 outstanding claims.

Can foreigners claim from the Road Accident Fund?

Yes. Following the April 2026 SCA ruling, all road accident victims in South Africa — including undocumented foreign nationals — are entitled to claim compensation from the RAF. The fund cannot exclude claimants based on immigration status.

What is the Road Accident Benefit Scheme (RABS)?

RABS is a proposed no-fault compensation scheme that would replace the current RAF. Under RABS, victims would receive benefits regardless of who caused the accident. However, actuarial research suggests that RABS alone is not a viable solution, and a hybrid model incorporating elements of RABS, the current RAF, and private insurance is recommended.

Sources: IOL, Daily Maverick, Eyewitness News (EWN), Currency News, MSN/IOL (SCOPA Report), Parliament of South Africa. Published: 5 May 2026.