PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRANSPORT (PCoT) 3 - - PowerPoint PPT Presentation

PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRANSPORT (PCoT) 3 SEPTEMBER 2019

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• Background
• Mandate
• Business Model
• Organisational Structure
• Performance Information
• Alignment to the 7 Apex Areas
• Strategic Objectives & RAF’S Project
• Financial Status
• Challenges and Mitigation
• Conclusion
• Annexure
• 2019/2020 APP

PRESENTATION OUTLINE

BACKGROUND

Corporate and Statutory Form Road Accident Fund Act, 1996 (Act No. 56 of 1996) & RAF Amendment Act, 2005 (Act No. 19 of 2005) National Public Entity (Schedule 3A of the PFMA). Constitutional Court Rulings and legal precedents have shaped the mandate. Objective of the Fund ➢ Section 3 of the RAF Act Payment of compensation for loss or damage wrongfully caused by the driving of motor vehicles

• Limited to bodily injury or death
• Excludes secondary emotional shock
• Material damages not covered (non personal damages)

➢ Section 17(4) of the RAF Act Provides support in respect of future treatment and rehabilitation (future medical expenses i.e. rehabilitation centre costs, assistive devices, home modification, treatment and other related goods and services)

MANDATE OF THE ENTITY

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Compensation

:

➢ Section 17 of the RAF Act

• General damages (serious injury)
• Past medical expenses
• Future medical expenses (undertaking)
• Past loss of earnings / earning capacity
• Future loss of earnings / earning capacity
• Past loss of support
• Future loss of support

➢ Section 18 of the RAF Act

• Necessary actual costs of funeral / cremation

(Coffin, Transportation, storage and the grave / cremation costs)

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MANDATE OF THE ENTITY

➢ Section 21 of the RAF Act

• Indemnifies the wrongdoer (for as long as the RAF can pay claims)
• Indemnification limited to civil claims

The Fund is called on to:

• Indemnify the wrongdoer and compensate the injured and dependents of the deceased

breadwinners.

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BUSINESS MODEL

RAF Customer Engagement Model Road Accident Fund Victims

F2F Phone Electronic

Hospital Service Centres (97) All nine Provinces Customer Service Centres (5)

• Free State
• North West
• Polokwane
• Northern

Cape

• Mpumalanga

Community Service Centres (5)

• Vhembe
• Port Elizabeth
• Mamelodi
• Beaufort West
• New Castle

Contact Centre (1) Over 421 602 calls received Mobile RAF (3)

• Cape Town
• Kwazulu Natal
• Johannesburg

& Pretoria

Strategic Outcomes

STRATEGY OUTCOMES 2015 - 2020

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ORGANISATIONAL STRUCTURE

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PERFORMANCE INFORMATION 2014 -2019

ENTITY ACHIEVEMENTS 2014/15 FY – 2018/19 FY

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Highlights

THE YEAR AT A GLANCE

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Highlights (continued)

THE YEAR AT A GLANCE

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RAF ALIGNMENT TO 7 APEX PRIORITIES

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PRIORITY AREA STRATEGIC OBJECTIVE INDICATORS Economic transformation and job creation Accessible services RAF Transformation

• Community outreach campaigns (RAF on the Road). 2019/2020

19/20 targeted 86 210 claimants engaged.

• Transition from RAF to RABS
• 200 unemployed Youth afforded drivers’ licences and Public Driver

Permits (PDP).

• 3500 Caregivers employed, for servicing injured claimants – R294

million in 2018/19 FY. Education, skills and health Efficient claims processing and Improve people management

• Improve post-crash care management
• Learnerships (148) and Internships (57) – R44,3 million in 2018/19
• FY. R15 million is budgeted in 2019/20 to train 192 young graduates.
• 80% of allocated budget spent on Skills Development. R25,8 million

budgeted in 2019/20 FY training budget including bursaries.

• Treatment plans introduced for all serious injuries
• Increase active medical undertakings to provide free medical care

for seriously injured beneficiaries

RAF ALIGNMENT TO 7 APEX PRIORITIES

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PRIORITY AREA STRATEGIC OBJECTIVE INDICATORS Social cohesion and safe communities RAF Transformation Efficient claims processing and Improve people management

• 90% of allocated CSR budget spent on Socio-Economic Development - R8, 5 million

in 2018/19 FY and R8,9 million in 2019/20FY.

• Revamping Hospital Centeres Emergency Units to be accessible to people living with

disabilities.

• Promotion of Child Restraint Program – providing car seats - approximately 480

seats in 2018/19 FY.

• Low cost Infrastructure in conjunction with Municipalities to promote pedestrian

safety

• RABS Business Model - Transition RAF to RABS
• Manage the number of outstanding claims to compensate and rehabilitate victims
• f road crashes - 237 164 claims settled and 173 453 claims finalised
• Improve direct claims management

to ensure full compensation goes to the accident victim

• Improve post-crash care management to ensure victims of road crashes are

provided with medical care and re-integrated into the communities and are economically active citizens.

• Maintain EE targets in accordance with the National Economically Active People

(NEAP) requirements.

RAF ALIGNMENT TO 7 APEX PRIORITIES

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PRIORITY AREA STRATEGIC OBJECTIVE INDICATORS A capable, ethical and developmental state Assured control environment

• 100% implementation of Ethics initiatives
• Improve fraud detection and management before undue payments

are made - R1,4billion 18/19 FY

• Unqualified audit opinion
• Improve procurement outcomes

STRATEGIC OBJECTIVE & RAF’S PROJECTS

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EFFICIENT CLAIMS PROCESSING EFFECTIVE FINANCIAL MANAGEMENT RAF TRANSFORMATION KEY PERFORMANCE INDICATORS

• Manage the number of
• utstanding claims
• Increase efficiency of claims

processing

• Claims fraud detection
• Improve direct claims

management

• Improve post-crash care

management KEY PERFORMANCE INDICATORS

• Effective cash flow management
• Improve procurement outcomes

KEY PERFORMANCE INDICATORS

• RAF readiness for RABS

OPTIMAL ICT SERVICES ASSURED CONTROL ENVIRONMENT KEY PERFORMANCE INDICATORS

• Ensure optimal ICT availability
• Implement ICT Strategy
• Implement the information, cyber

security and risk management strategy KEY PERFORMANCE INDICATORS

• Raise ethical standards
• Improve combined assurance
• utcomes

PROVIDING ACCESSIBLE SERVICES KEY PERFORMANCE INDICATORS

• Promote RAF services through
• utreach programmes and other

events

• Improved Call Centre

responsiveness IMPROVED PEOPLE MANAGEMENT KEY PERFORMANCE INDICATORS

• Improved people management
• RAF’s contribution towards

government’s social and economic agenda

2019/20 FY ANNUAL PERFORMANCE PLAN

RAF PROJECTS CORPORATE SOCIAL RESPONSIBILITY, ROAD SAFETY AND OTHERS

• Files and patient optimisation project in partnership with the Health Systems Trust and SA Health

Care Foundation

• The project aims to support the existing patient records management system in public

hospitals where the RAF has offices and in particular, motor vehicle accident records management system including archiving of records.

• Trauma and Accident Medical equipment and providing of Rehabilitation equipment in hospitals /

centres project

• This initiative supports the Golden Hour rule which states that preparing for a serious injury

accident may have a direct bearing on the survival or recovery of the victim, CSR provides medical equipment in order to continue to save lives of the critically ill and injured.

• Caregiver Training project
• This training aims to capacitate and equip RAF Caregivers with the necessary knowledge and

skills that are required in order to deal with the day-to-day challenges around the home during their continued care for road accident victims.

• Schools for Learners with Special Educational Needs
• This initiative aims to ensure that the learners with special needs are integrated back into

the society in line with RAF’s mandate.

Current Critical Projects

RAF PROJECTS CORPORATE SOCIAL RESPONSIBILITY, ROAD SAFETY AND OTHERS

• Youth Driver Development Programme
• The RAF seeks to contribute towards road safety and to reduce the unemployment amongst

the Youth through a Youth Driver Development Program. The Program aims to build a cadre

• f young professional drivers by equipping unemployment youth with safe driving skills

through a training program to obtain a learners license, driver’s license and Public Drivers Permit (PrDP).

• Promotion of Child Restraint Programme
• The aim of the Promotion of Child Restraint Program is to educate motorists about the

importance of restraining infants between 0-3 years of age in their vehicles when travelling with them.

• Low Cost Infrastructure Project
• Speed and pedestrian visibility have been identified as major causes of pedestrian accidents

in South Africa. The Low Cost Infrastructure interventions seeks to reduce pedestrian related deaths through erection of speed calming measures such speed humps, rubble strips, lane restrictions and improving signage and road signals.

• Ridewise Training
• The Ride Wise Training is a practical safety training for motorcyclists. The training

accommodates both social bikers, commuting bikers as well as delivery bikers.

• RAF on the Road Programme
• On a monthly basis RAF conducts outreach RAF on the Road in all nine provinces across the

country in areas far from RAF offices.

Current Critical Projects

FINANCIAL INFORMATION 2014-2019

INCOME STATEMENT

YEAR ENDED 31 MARCH 2019 R’m 2018 R’m 2017 R’m 2016 R’m 2015 R’m

• 1. INCOME

43 239 37 341 33 342 33 206 22 680 1.1 Net Fuel Levies 43 139 37 251 33 230 33 113 22 614 1.2 Investment Income 99 90 109 89 66 1.3 Reinsurance Income

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• 1.4 Other Income

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• 2

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• 2. EXPENDITURE

(99 019) (63 692) (68 083) (68 164) (42 132) 2.1 Claims Expenditure (96 405) (61 346) (65 955) (66 266) (40 456) 2.2 Employee Costs (1 735) (1 605) (1 435) (1 280) (1 164) 2.3 General Expenses (515) (454) (420) (398) (377) 2.4 Reinsurance Premiums (22) (22) (22) (22) (23) 2.5 Depreciation&Amortisation (51) (41) (43) (47) (45) 2.6 Finance Costs (291) (224) (209) (151) (67)

• 3. DEFICIT FOR THE YEAR

(55 780) (26 351) (34 741) (34 958) (19 452)

BALANCE SHEET

YEAR ENDED 31 MARCH 2019 R’m 2018 R’m 2017 R’m 2016 R’m 2015 R’m

• 1. ASSETS

1.1 Current Assets 10 947 9 563 8 982 9 569 7 085 1.2 Non-Current Assets 273 243 216 227 282 Total Assets 11 220 9 806 9 198 9 796 7 367

• 2. LIABILITIES AND RESERVES

2.1 Current Liabilities 41 981 39 045 35 299 47 486 35 586 2.2 Non-Current Liabilities 231 354 177 102 153 892 107 562 82 028 2.3 Reserves (262 115) (206 341) (179 993) (145 252) (110 247) Total Liabilities and Reserves 11 220 9 806 9 198 9 796 7 367

CASH FLOW STATEMENT

FINANCIAL PERIOD ENDED 31 MARCH 2019 R’m 2018 R’m 2017 R’m 2016 R’m 2015 R’m

• 1. OPERATING ACTIVITIES

(585) (19) (362) 1 034 (1 399)

• 2. INVESTING ACTIVITIES

(74) (66) (30) (38) (58)

• 3. FINANCING ACTIVITIES
• 4. NET INCREASE/(DECREASE)

(659) (85) (392) 996 (1 457)

• 5. AT THE BEGINNING OF PERIOD

1 567 1 652 2 044 1 048 2 505

• 6. AT THE END OF PERIOD

908 1 567 1 652 2 044 1 048

CLAIMS LIABILITY

FINANCIAL YEAR ENDED 31 MARCH 2019 R’m 2018 R’m 2017 R’m 2016 R’m 2015 R’m

• A. Claims Requested But

Not Yet Paid 11 232 9 061 8 516 10 636 6 940

• B. Claims Reported But Not

Yet Settled 173 559 139 204 119 830 99 152 78 491

• C. Claims Incurred But Not

Yet Reported 87 124 67 013 59 633 44 182 30 807

• D. Handover Costs
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27 37 131 271 915 215 302 188 006 154 007 116 369 NOTES:

• A. Claims Requested But

Not Yet Paid This represents claims that are due and payable.

• B. Claims Reported But Not

Yet Settled This represents insurance liability. It is not known when these will be paid and how much will be paid.

• C. Claims Incurred But Not

Yet Reported Claims have not been lodged nor has an assessment been made in terms

• f RAF Act to determine whether RAF has an obligation or not.
• D. Handover Costs

Big tender in 2015 - New panel attorneys appointed (R181m provision).

CLAIMS EXPENDITURE

FINANCIAL YEAR ENDED 31 MARCH 2019 R’m 2018 R’m 2017 R’m 2016 R’m 2015 R’m

• A. Claims Paid

39 793 34 049 31 955 28 628 21 470

• B. Increase/(Decrease) in RNYP

2 171 546 (2 119) 3 696 6 557

• C. Increase in Claims Provision

54 441 26 751 36 119 33 942 12 429 96 405 61 346 65 955 66 266 40 456 NOTES:

• A. Claims Paid

This represents actual payments during the period

• B. Increase in RNYP

In the absence of cash, RNYP increased

• C. Increase in Claims Provision

Increase due valuation performed

BREAKDOWN OF CLAIMS PAID

FINANCIAL YEAR ENDED 31 MARCH 2019 R’m 2018 R’m 2017 R’m 2016 R’m 2015 R’m

• A. Claimant Compensation

26 473 23 258 22 287 21 644 15 525

• B. Claimant Medical Costs

3 521 2 498 2 120 1 510 1 306

• C. Claimant and RAF Legal and

Other Costs 9 799 8 293 7 547 5 473 4 635 39 793 34 049 31 954 28 627 21 466 NOTES:

• A. Claimant Compensation

This is made up of Loss of Earnings and Support, General Damages and Funeral Costs

FUNDING MODEL 2019 -2022

FUNDING

Assumption: No Levy Increase

Year 2018 2019 2020 2021 2022 Net Fuel Levy

36,048,140 41,383,264 43,018,082 43,233,172 43,449,338

Adhoc Funding Injection

• Fuel Levy increase (cents)

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Total Levy in cents per litre

163 193 193 193 193

Total Revenue received

36,048,140 41,383,264 43,018,082 43,233,172 43,449,338

Closing Balance-(R'000)

1,567,189 1,695,016 1,698,850 1,698,966 1,698,969

Shortfall(RNYP balance)-(R'000)

9,061,346 10,999,524 15,972,173 26,021,941 41,632,233

Deficit for the year-(R'000)

• 26,365,778
• 35,353,216
• 44,121,412
• 55,279,463
• 67,417,925

Accumulated surplus(deficit)-(R'000)

• 206,330,727
• 241,747,682
• 285,912,788
• 341,238,566
• 408,705,585

Claims liability Provision-(R'000)

216,115,461 252,555,033 297,130,126 352,574,272 420,166,045

• 1. Current Version (No Fuel Levy increase)

For scenario 1, we assume that there will be no further fuel levy increases over the period 2019 to 2022.

INCOME STATEMENT

YEAR ENDED 31 MARCH 2022 R’m 2021 R’m 2020 R’m 2019 R’m 2018 R’m

• 1. INCOME

43 594 43 377 43 459 42 309 37 342 1.1 Net Fuel Levies 43 495 43 278 43 360 42 214 37 251 1.2 Investment Income 99 99 99 95 90 1.3 Other Income

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• 2. EXPENDITURE

(111 012) (98 656) (87 580) (77 662) (63 708) 2.1 Claims Expenditure (107 064) (95 016) (84 304) (74 747) (61 346) 2.2 Employee Costs (2 670) (2 451) (2 165) (1 881) (1 598) 2.3 General Expenses (809) (766) (726) (690) (476) 2.4 Reinsurance Premiums (30) (29) (27) (26) (22) 2.5 Depreciation and Amortisation (53) (53) (56) (51) (41) 2.6 Finance Costs (386) (341) (302) (267) (224) 2.7 Loss on disposal of assets

• (1)
• 3. DEFICIT FOR THE YEAR

(67 418) (55 279) (44 121) (35 353) (26 366)

BALANCE SHEET

YEAR ENDED 31 MARCH 2022 R’m 2021 R’m 2020 R’m 2019 R’m 2018 R’m

• 1. ASSETS

1.1 Current Assets 10 976 10 920 10 865 10 509 9 542 1.2 Non-Current Assets 485 416 353 298 243 Total Assets 11 461 11 336 11 217 10 807 9 785

• 2. LIABILITIES AND RESERVES

2.1 Current Liabilities 109 695 84 801 66 640 54 589 39 033 2.2 Non-Current Liabilities 310 471 267 774 230 490 197 966 177 095 2.3 Reserves (408 705) (341 239) (285 913) (241 748) (206 343) Total Liabilities and Reserves 11 461 11 336 11 217 10 807 9 785

CHALLENGES AND MITIGATIONS

CHALLENGES AND MITIGATIONS

CHALLENGE :Inadequate Funding

• Cash constraints leading to non payment of finalised claims.
• Attachment of the RAF’s bank account and assets by Sheriffs.

Mitigation Measures

• Stringent Cash Flow Management
• Improve efficiencies across business

CHALLENGE : RAF founding legislation

• Continuation of the RAF dispensation based on unsustainable funding model

Mitigation Measures:

• Support DoT with proposed policy changes

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• Despite its challenges and limitation, the RAF continues to transform itself, to record successes

and to drive the evolution of the business into a new dispensation which addresses the weaknesses of the present model and which will benefit considerably more South Africans for decades to come

• The 2015-2020 Strategic Plan and the 2019/2020 APP are focused on preparing for the future

with a keen emphasis on:

• Processing claims, doing so in less time and enhancing the quality of claim processing
• Prudently managing available cash
• Ensuring good governance and management of the business
• Motivating for additional funding to meet real, current demand
• Great effort is and will be placed on:
• Fulfilling the Strategic Plan and APP deliverables;
• Addressing the challenges and risks;
• Preventing the catastrophic socio-economic effects of accidents in our society; and
• Continue supporting the transition from RAF to new sustainable dispensation.

CONCLUSION

THANK YOU

Annexure 1 Annual Targets For The 2019/20 Financial Year

OBJECTIVE 1: EFFICIENT CLAIMS PROCESSING

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 1. Manage the number of

• utstanding

claims increase number of personal claims with offers accepted Increase by 10% Increase by 10% Increase by 10% Increase by 10% 2. Increase efficiency of claims processing Improve personal claims processing turnaround time Reduced by 10% Reduced by 10% Reduced by 10% Reduced by 10% 3. Improve supplier claims processing turnaround time Reduce by 10% Reduce by 10% Reduce by 10% Reduce by 10%

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OBJECTIVE 1: EFFICIENT CLAIMS PROCESSING CONTINUE…

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 4. Claims Fraud detection Increase percentage of fraud detected before undue payments are made, based on number of files by 10% Increase by 2.5% Increase by 5 % Increase by 7.5 % Increase by 10% 5. Increase percentage of fraud detected before undue payments are made, based on the value by 10% Increase by 2.5% Increase by 5 % Increase by 7.5 % Increase by 10%

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OBJECTIVE 1: EFFICIENT CLAIMS PROCESSING CONTINUE …

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 6. Improve direct claims management % increase in direct personal claims originated by 15% Increase by 15% Increase by 15% Increase by 15% Increase by 15% 7. Reduce % of direct personal claims converted to represented by 10% Reduce by 10% Reduce by 10% Reduce by 10% Reduce by 10% 8.

Improve Litigation Management

Increase % of

• ffers made

before trial date by 10 % Increase by 2.5% Increase by 5% Increase by 7.5% Increase by 10%

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OBJECTIVE 1: EFFICIENT CLAIMS PROCESSING CONTINUE

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 9. Improve post-crash care management increase of active undertakings by 10% Increase by 2.5% Increase by 5% Increase by 7.5% Increase by 10% 10. Treatment plans introduced for serious injuries increase by 100% 100% 100% 100% 100%

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OBJECTIVE 2: PROVIDING ACCESSIBLE SERVICES

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 11. Promote RAF services through

• utreach

programmes and other events 10% increase in the number of potential claimants serviced during

• utreach

programmes and

• ther events

Increase by 10% Increase by 10% Increase by 10% Increase by 10% 12. Improved Call Centre responsivene ss Maintain % of abandoned calls to 2.8 % Maintain abandoned calls to 2.8 % Maintain abandoned calls to 2.8 % Maintain abandoned calls to 2.8 % Maintain abandoned calls to 2.8 %

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OBJECTIVE 3: EFFECTIVE FINANCIAL MANAGEMENT

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 13. Effective cash flow management Manage Claims Payment Average Days as per the cash management procedure Manage Claims Payment Average Days as per the cash management procedure Manage Claims Payment Average Days as per the cash management procedure Manage Claims Payment Average Days as per the cash management procedure Manage Claims Payment Average Days as per the cash management procedure 14. Improve procurement

• utcomes

100% success of all bids issued within 8 months ANNUAL TARGET

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OBJECTIVE 4: OPTIMISING ICT

Performance Indicator Measure 2019/20 1st 2nd 3rd 4th

• 15. Ensure optimal

ICT availability % availability

• f critical

services 98% availability

• f all

services 98% availability of all services 98% availability of all services 98% availability of all services 98% availability of all services

• 16. Implement ICT

Strategy Implemen t the ICT Strategic initiatives Implement 2019/20 ICT Strategic initiatives ANNUAL TARGET

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OBJECTIVE 4: OPTIMISING ICT CONTINUE …

Performance Indicator Measure 2019/20 1st 2nd 3rd 4th

• 17. Implement ICT

Strategy Implement the Information, Cyber Security and Risk Manageme nt Strategy Implement 2019/2020 initiatives ANNUAL TARGET

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OBJECTIVE 5: PEOPLE MANAGEMENT

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th

• 18. Manage
• rganisational

performance Maintain vacancy rate at 6% Maintain vacancy rate at 6% Maintain vacancy rate at 6% Maintain vacancy rate at 6% Maintain vacancy rate at 6%

• 19. RAF’s

contribution towards government’s social and economic agenda Increase disability ratio to 2 % Increase disability ratio to 2 % Increase disability ratio to 2 % Increase disability ratio to 2 % Increase disability ratio to 2 % 80 % of allocated budget spent on Skills Development ANNUAL TARGET 20.

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OBJECTIVE 5: PEOPLE MANAGEMENT CONTINUE …

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 21. RAF’s contribution towards government’s social and economic agenda 90 % of allocated budget spent on Socio-Economic Development ANNUAL TARGET 22. 90 % of allocated budget spent on Enterprise Supplier Development 23. Contribute to government priorities of youth unemployme nt and road safety Increase to 275 ANNUAL TARGET Increase to 90% ANNUAL TARGET

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OBJECTIVE 6: RAF TRANSFORMATION

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 25. RAF readiness for RABS Approved RABS Business Model ANNUAL TARGET 26. Approved RABS Skills Transition Plan ANNUAL TARGET

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OBJECTIVE 7: ASSURED CONTROL ENVIRONMENT

Performance Indicator Annual Target 2019/2020 1st 2nd 3rd 4th 27. Raise ethical standards 100 % implementation

• f ethics initiatives

ANNUAL TARGET 28. Improve Combined Assurance Outcomes Unqualified audit

• pinion

ANNUAL TARGET

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THANK YOU