‘It’s not true RAF is imploding’: CEO dismisses delaying payments amid R8.27bn claims backlog

The Road Accident Fund (RAF) has hit back at criticism that the RAF was clogging up the courts and delaying payments of accident claims.

RAF held a media briefing regarding the outcomes of the 2023/2024 financial year, which ended in March.

The press conference comes just two days ahead of the Auditor-General’s scheduled update to Parliament on the RAF’s financial performance.

RAF challenges ‘historic’

On Monday, RAF CEO Collins Letsoalo stated that the current board, appointed in 2019, inherited an “insolvent” institution.

In response, the RAF developed its 2020-2025 strategic plan to drive a turnaround and place the entity on a sustainable financial and operational trajectory.

“RAF’s challenges are not contemporary in nature; they are historic in a lot of ways,” he said.

Letsoalo lamented the fact that the fuel levy, which has remained unchanged at R2.18 per litre for the past three years, has impacted the RAF, as it was the entity’s sole source of income.

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The RAF CEO argued that, when adjusted for inflation, the levy has effectively decreased to about R1.93 per litre.

He highlighted that without changes to the RAF’s operating model, the stagnant levy would have led to the fund’s collapse.

“Our predecessors will tell you that they have never experienced this, where the fuel levy has not been increased for this long, but we have managed to keep RAF floating even under [such] circumstances.”

Watch the briefing below:

Claims backlog

Letsoalo reported that the RAF had significantly reduced its short-term debt to R8.27 billion, a notable improvement from the R16.23 billion recorded in the 2019/2020 financial year.

“It’s almost half of what it was when we started.”

The RAF CEO clarified that the short-term debt represented the entity’s backlog of settled claims, commonly referred to as “requests not yet paid” (RNYP).

READ MORE: High Court orders Road Accident Fund to pay costs in contempt case

The claims backlog has increased slightly by 1.2% after being reduced by approximately 7.4% the previous year.

Almost 80% of claims submitted do not have sufficient information and documentation to enable the RAF to investigate the claims.

RAF legal costs up

Letsoalo noted that the RAF’s legal costs reached R3.89 billion, marking a 1.2% increase from the previous year.

However, this was a significant reduction from the R9.43 billion reported in the 2019/2020 financial year.

According to the CEO, this resulted in savings of around R24 billion in legal costs for the RAF.

Letsoalo also highlighted that the RAF had increased its out-of-court settlement agreements over the past three years, settling nearly 82% of all claims in the 2023/2024 financial year.

“We agreed to settle with either the attorney or the claimant; this is at 81.9%. When we started, it was around 61.2%.”

ALSO READ: RAF CEO claims ‘systemic bias’ by judges against fund amid backlog crisis

He stressed that the RAF’s aim with the turnaround plan was to “litigate less and settle more claims”.

“But we know lawyers don’t make money by settling matters. It just doesn’t work like that,” the RAF CEO later remarked.

“Contrary to popular belief, we don’t see lawyers as enemies. We see them as people that can help deal with this matter, but we understand that we sit on both sides.

“We are trying to reduce litigation [and] their earnings are based on litigation. So, the more time they spend on a matter, the more money they make—that’s the reality of it.”

#RAFMediaBriefing pic.twitter.com/hlAV86g146

— The Road Accident Fund (@RAF_SA) September 16, 2024

RAF not imploding

Letsoalo responded to criticism that the RAF was contributing to court backlogs.

“Imagine having to sue the state for your own social benefit scheme,” he said.

“You’ll find that 99% of the cases that are on the [court] roll is someone versus the RAF. It’s hardly ever us taking someone to court.”

He stated that the RAF only defends itself in court when necessary, rather than engaging in cases without merit.

READ MORE: RAF appeals ruling on claims by illegal foreigners

Letsoalo also dismissed concerns that the RAF was on the brink of collapse.

“It is not true that the RAF is imploding. I also hear that we have been accused of delaying payments unnecessarily [but] what would we benefit from that?”

He contended that RAF was the “most scapegoated people in the world”.

“Nothing in what we do is unlawful, by the way. We will never not pay [a claim] when we are supposed to and deliberately so; why would we do that?”

Additionally, the RAF CEO revealed the entity recorded a deficit of R1.6 billion and also received an adverse audit outcome from the Auditor-General.