RAF to change operating model in bid to become sustainable

Updated July 20, 2020 | By Neo Motloung

The Road Accident Fund (RAF) has introduced a new strategic plan for the ailing state-owned agency.

Acting CEO, Collins Letsoalo says the current operating model has left the RAF unsustainable.

Letsoalo says the new model is moving away from litigation to claims management.

He adds the priority is early investigation and settlement of claims within 120 days.

“This model has seen the actuarial liability of the RAF increase exponentially especially over the last five year to more than R320 billion. Our short-term liability, mainly comprising of money owed to claimants, is sitting at R17.2 billion,” says Letsoalo.

“All the above attributable to this model and that has been anchored around litigation rather than investigating (and) than settling claims as provided in the RAF Act.”

Letsoalo says a system that has administrative costs that amount to 40% is unsustainable.

Letsoalo explains the operation system collects R43 billion a year; R26 billion goes to claimants, R17 billion to administrative costs, and R10.6 billion to legal fees.

“That could not have been the intention of this Act, that those intermediaries must benefit to a greater extent,” he says.

Listen to Letsoalo below: