Overview of the Performance of the Road Accident Fund in 2012/13 Portfolio Committee of Transport

1. Overview of the Performance of the Road Accident Fund in 2012/13Portfolio Committee of Transport • 10 0ctober 2013

2. Purpose • The purpose of this presentation is to present an overview of the performance of the Fund in 2012/13… • Background information • Where the business is: • Status at the end of 2012/13 • Highlights in 2012/13 • Challenges • Annual Performance Plan • Auditor-General • Where the business needs to go: • Strategic framework • Operational targets for 2013/14 • Priorities for 2013/14

3. Background… • Road Accident Fund Act, 1996 (Act No. 56 of 1996) & RAF Amendment Act, 2005 (Act No. 19 of 2005) • “Payment of compensation in accordance with this Act for loss or damage wrongfully caused by the driving of a motor vehicle” • Provide compulsory cover to all users of South African roads against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa • Constitutional Court Rulings and legal precedents have shaped the mandate • National public entity (Schedule 3A of the PFMA) • Corporate and Statutory Form

4. Background… • Business Model Revenue Grants & investment revenue Levy on fuel Fuel sold Road Activity Financial Position Administrative costs Number & severity of accidents Volume of claims Third party costs Value of claims Cost

5. Background… • Business Process

6. Background… • Physical • Head office in Centurion • Five regional processing centres • Pretoria, Johannesburg, Durban, East London and Cape Town • Customer service centres • Nelspruit • Mafikeng, Bloemfontein, Polokwane and Kimberley • Virtual • Call centre (0860 23 55 23) • Web (www.raf.co.za) • Twitter (@RAF_SA) • Facebook (www.facebook.com/#!/RoadAccidentFund) • Service Infrastructure

7. Background... • South Africa...Roads…Vehicles...Transport...Crashes...Death & Injuries...Consequences! • 70 year funding regime driven by an “accessible” revenue stream • Moved from protecting a wrongdoer from being sued to supporting victims • Compensation is fault-based and fault must be proven or excluded • Rulings and Orders are not always consistent • Great deal of subjectivity • Micro-economy has been created and is sustained by the RAF • Lawyers, Advocates, Assessors, Experts etc • Contingency fees charged in excess of 25% • 50% of matters on the Court roll relate to road accidents • Claimants are often not the primary beneficiary • Operational Context

8. Background... • Social Context

9. Background... • The RAF carries an extensive legacy, partly true and partly perceived, which was built over many decades • Compensation scheme that has not had revenue and expenditure aligned • ‘Insolvent and bankrupt’ for 31 years as a result of a provision for claims incurred • A “lawyers” business • Intensely bureaucratic • Inefficient, uncaring and impersonal • Fraught with fraud • The Board and management committed in 2012 to create a new legacy, one of delivering services efficiently and effectively to victims of crashes who need the support • Early signs of change are visible... • Unfortunate legacy

10. Purpose • The purpose of this presentation is to present an overview of the performance of the Fund in 2012/13… • Background information • Where the business is: • Status at the end of 2012/13 • Highlights in 2012/13 • Challenges • Annual Performance Plan • Auditor-General • Where the business needs to go: • Strategic framework • Operational targets for 2013/14 • Priorities for 2013/14

11. Where the business is… • Financial indicators

12. Where the business is… • Status at the end of 2012/13 • Historical Review

13. Where the business is… • Status at the end of 2012/13

14. Where the business is… • Status at the end of 2012/13

15. Where the business is… • Status at the end of 2012/13

16. Where the business is… • Status at the end of 2012/13

17. Where the business is… • Status at the end of 2012/13

18. Where the business is… • Status at the end of 2012/13

19. Where the business is… • Status at the end of 2012/13

20. Where the business is… • Status at the end of 2012/13

21. Where the business is… • Status at the end of 2012/13

22. Where the business is… • Status at the end of 2012/13

23. Where the business is… • Status at the end of 2012/13

24. Where the business is… • 2012 was “The Year of the Customer” • Road Accident Fund (Transitional Provisions) Act, 2012 enacted on 13 February 2013 • Supreme Court of Appeal inLebeko and Duma confirmed that it is not for the court to determine whether the injury is serious   • High Courts declaredso-called “common law” contingency fee agreements that do not comply with the Contingency Fees Act, 1997 invalid • RAF on the Road in 15 communities, serviced more than 8 000 claimants and settled R102 million • Nelspruit office was established and is fully operational (North West, Northern Cape, Limpopo and the Free State) • Streamlined business processes designed, documented and implemented • New organisational structure designed and implemented • Quicker turnaround times for the settling of claims recorded • The average number of capital (or compensation) payments and finalisations per claims handler improved • Highlights in 2012/13

25. Where the business is… • SOP for the management of writs of execution developed and implemented • Full review of all claim files was undertaken and the staging of all open claims is now known • Contract and bid templates developed to ensure efficient tender processes • Various regulations to the Act were published • Risk management methodology and systems reviewed, evaluated and changed successfully • Numerous internal audit findings resolved and the final audit is “Clean” • Fund achieved 86% of APP targets (53% in 2011) (70% against original APP) • Highlights in 2012/13

26. Where the business is… • The number of outstanding claims • Enhanced activity, assessed business processes and enhanced claims processing capacity • Structured block settlements were held • Management of the panel of attorneys was improved • The growing liability for claims incurred • Improved claims processing and finalisation • Curtailed the re-opening of claims • Introduced quarterly actuarial appraisals • The large amounts of money spent on legal costs • Management implemented new processes in the claims environment • Litigation units established in each of the regional offices • Presence maintained in Courts • The settlement of direct claims •  Marketing yielded great demand • Capacity has been enhanced • New business processes put in place • Challenges attended to

27. Where the business is… • APP Performance in 2012/13 * Target partially achieved – (1) Number of claimants engaged at road shows per annum and (2) Achieve / exceed Employment Equity target of 90% **Target not achieved - Relates to 5% reduction in the deficit

28. Where the business is… • Opinion • The financial statement present fairly, in all material respects, the financial position of the Road Accident Fund as at 31 March 2013 • Emphasis of the matter • My opinion is not modified in respect of this matter • Going Concern • Accumulated deficits of R51 587 567 and that the public entity’s total liabilities exceeded its total assets by R51 463 953 as at 31 July 2013 • Predetermined objectives • There were no material findings on the annual performance report concerning the usefulness and reliability of the information • Compliance with laws and regulations • I did not identify instances of material non-compliance with specific with specific matters in key applicable laws and regulations • Internal control • I did not identify any deficiencies in internal control which i consider sufficiently significant for inclusion in this report. • Annual audit by the Auditor-General

29. Purpose • The purpose of this presentation is to present an overview of the performance of the Fund in 2012/13… • Background information • Where the business is: • Status at the end of 2012/13 • Highlights in 2012/13 • Challenges • Annual Performance Plan • Auditor-General • Where the business needs to go: • Strategic framework • Operational targets for 2013/14 • Priorities for 2013/14

30. Where the business needs to go… • Strategic framework

31. Where the business needs to go… • The Fund has succeeded in aligning its strategic and operational targets • The strategic plan’s targets tie back to the four strategic objectives • Targets contained within the Strategic Plan flow to the APP and then onward to Executive and employee scorecards • For 2013/14 there are 25 performance targets which are clearly defined in the APP • Operational Targets for 2013/14

32. Where the business needs to go… • Strategic priorities • Implement the APP successfully • Ensure that new targets are timeously attended to • Operational priorities • Build on the enhanced brand and market presence • Ensure optimal capacity ~ numbers and performance measures • Maintain efficient operational ~ processes and costs • Improve claim processing ~ turn around times, process adherence and volumes • Prioritise direct claims ~ staff numbers and process adherence • Improved litigation management (Panel of Attorneys and Court case flow) • Improve data collection, analysis and reporting • Roll out the national customer service footprint and RAF spatial plan • Procure claim administration services • Implement the claim system enhancements • Priorities for 2013/14

33. Conclusion • RAF has not been in ‘the best of places’ • Challenges, weaknesses and risks were entrenched and often long-standing • Change is taking place and there is growing recognition of the Fund’s mandate and contribution • Great effort is and will continue being placed on: • Fulfilling the strategic objectives • Addressing the challenges and risks • Providing efficient support to the victims of road accidents • Preventing the catastrophic socio-economic effects of accidents in our society • 2013 is the RAF’s “Year to Shine”

34. Thank You