Johnathan Paoli
THE Roadside Accident Fund (RAF) CEO Collins Letsoalo announced on Wednesday the encouraging progress of turning the institution around, saying that while the fund still faced significant challenges, the 2020 – 2025 strategy in conjunction with the proposed legislative amendments presents the best opportunity to finally see the RAF on a sustainable financial and operational path.
Letsoalo briefed the media on both the RAF Audit Outcome 2022/2023 by the Auditor-General of South Africa (AGSA) as well as the RAF Amendment Bill.
The CEO said that the RAF has been confronted with a myriad of challenges, key among which was the risk to its financial and operational sustainability and it is important to take into account these were not contemporary challenges which started in 2019, but in fact date back to the Fund’s establishment on 01 May 1946.
The RAF 2020–2025 Strategic plan was developed in 2019 to effectively turnaround and shift the fund to a more sustainably financial and operational direction, following the establishment of the RAF board in 2019.
In light of the historical delays in settling claims, Letsoalo said one of the plan’s strategic outcomes was the settlement of claims within 120 days.
Letsoalo confessed that the biggest impediment to this target remains the 90% of claims in the RAF backlog which were lodged without the required minimum information to enable the fund to make a settlement offer, but said the introduction of the new RAF 1 form would go a long way in addressing this challenge.
In 2020, the RAF’s outstanding requests was at about R 17 billion and it was expected to increase to R 51 billion as at 31 March 2023 if the RAF had continued with its highly litigious and ineffective operating model, exceeding the annual RAF Fuel levy income of approximately R48.4 billion.
Letsoalo said that through the implementation of the strategy, the projected increase to R51 billion was reduced to R9.3 billion.
The RAF recorded a deficit of R8.43 billion for the 2022/23 financial year, as compared to 2021/22’s surplus of R428 million; but that this was largely due to the lack of an increase in the fuel levy over the past two years, despite the rise of inflation to an average of 6.9% during the fiscal year as well as an increase in claims liability when compared to the previous year, he said.
Letsoalo said the overall audit outcome of the RAF has improved compared to the prior year’s adverse audit and commended the meaningful cooperation between the fund and the auditor-general, despite an ongoing disagreement between the RAF and the AGSA regarding the accounting treatment of Claims Liabilities & Expenditure.
While praising both the general performance of the fund, as well as the successful attempts at reducing wasteful litigation costs and criminality such as duplicate payments, Letsoalo said that he remained committed to the challenges that remain going forward.
“There is no doubt that the RAF is not out of the woods yet. The Fund still faces significant challenges, the focus should therefore be on optimizing what works and managing the inherent risks that come with implementing a turnaround strategy,” the CEO said.
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