RAF working to decrease the R320bn shortfall

The Road Accident Fund (RAF) says it is looking at ways of decreasing its R320 billion shortfall. 

The RAF's Chief Executive Officer,  Collins Letsoalo on Thursday described the shortfall as an actuarial deficit. 

ALSO: AA remains hopeful for petrol price drop in coming weeks

Letsoalo explained that an actuarial deficit is mostly calculated for insurers, but the RAF is a social security fund.  

"What it then means is that RAF collects money and payout, our duty is to pay out compensation as provided in section 3 of our act," said Letsoalo. 

 NOW READ: RAF recovers R600m in duplicate payments to attorneys

"Section 4.1.B says we must assess and claims, and what used to happen is that we used to receive a claim and instead of assessing and settling it, we would actually, wait for 120 days." 

"After a when 120 days we would then receive summons and those summonses would be given to what we call a panel attorney. " 

"The panel attorney would then file a notice to defend, then there would be an exchange of pleadings for the next five... we would then go and settle the matter."  

The state entity revealed that they spent over R10 billion on legal fees to settle claims, with 95% of those being settled out of court. 

The agency has also decided not to renew the contracts of the panel attorneys as a means to cut expenses.

The agency would now assess and settle claims as provided by the RAF Act.