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INTRODUCTION
2 Road Accident Fund | Strategic Plan 2015 – 2020
Introduction 1Abbreviations 4
Foreword by the Minister of Transport 6
Introduction by the CEO of the Fund 7
Official Sign-Off 10
PartA Strategic Overview 121. Vision 14
2. Mission 14
3. Values 14
4. National Policy Direction 15
5. Legislative Environment 165.1 Strategic Context of the Fund 165.2 The Fund’s Business Model 165.3 Legal Framework and Other Mandates 175.4 Relevant Court Rulings 18
6. Situational Analysis 236.1 The Draft National Road Safety Strategy 236.2 Service Delivery Environment 246.3 Revenue and Cost 266.4 Key Value Drivers of the Fund 276.5 Key Challenges Facing the Fund 296.6 SWOT analysis and the PESTELG 346.7 Continuing Risks facing the RAF 36
7 The Fund’s Strategic Journey 397.1 Evolution of the Fund and the Fund’s Strategy 397.2 Strategic Transformation of the Fund 407.3 The Strategic Planning Process 41
TABLE OF CONTENTS
33Section 1 | Introduction
Part B: Strategic Objectives of the Fund 428 Part B: Strategic Objectives of the Fund 44
8.1 The Fund’s Five-year Priorities to Achieve its Seven Outcomes 448.2 Measuring the Fund’s Delivery 488.3 The Fund’s Outcome Measures and Five-year Targets 508.4 Financial Plan 578.5 Human Capital Management 60
Part C: Links to Other Plans 629 Part C: Links to Other Plans 64
9.1 RAF Funding Requirements 649.2 Fuel Levy Increase 649.3 Claims Expenditure 659.4 Provision for Outstanding Claims (ORC & IBNR) 659.5 Goods and Services and Compensation of Employees 669.6 Compensation of Employees 669.7 Cash Balances 669.8 Average Claim Amounts 669.9 Delay between Accident Date, Reporting Date and Settlement Date 669.10 Finance Model: Based on an Average Increase of 8c per Litre 669.11 Materiality Framework 669.12 Concluding Remarks 69
10 Part C: Links to Other Plans 7310.1 Strategy Alignment to the National Development Plan (NDP) 73
Annexure A: Technical Indicator Descriptions 74Annexure A: Technical Indicator Description and Examples 76
Annexure B: Funding Model 102
INTRODUCTION
4 Road Accident Fund | Strategic Plan 2015 – 2020
LIST OF ABBREVIATIONS/ACRONYMS
Amendment Act RAF Amendment Act, 2005 (Act No. 10 of 2005)
APP Annual Performance Plan
B-BBEE Broad-based Black Economic Empowerment
CEF Central Energy Fund
CEO Chief Executive Officer
CFO Chief Financial Officer
COO Chief Operations Officer
CRMP Compliance Risk Management Plan
CSN Customer Service Network
CSSS Comprehensive Social Security System
DoT Department of Transport
EE Employment Equity
FID Forensic Investigation Department
HSC Hospital Service Centre
IBNR The number of claims incurred, but not yet reported
ICA Information Collection Agent
IDTT Inter-Departmental Task Team
LOE Loss of Earnings
55Section 1 | Introduction
Amendment Act RAF Amendment Act, 2005 (Act No. 10 of 2005)
APP Annual Performance Plan
B-BBEE Broad-based Black Economic Empowerment
CEF Central Energy Fund
CEO Chief Executive Officer
CFO Chief Financial Officer
COO Chief Operations Officer
CRMP Compliance Risk Management Plan
CSN Customer Service Network
CSSS Comprehensive Social Security System
DoT Department of Transport
EE Employment Equity
FID Forensic Investigation Department
HSC Hospital Service Centre
IBNR The number of claims incurred, but not yet reported
ICA Information Collection Agent
IDTT Inter-Departmental Task Team
LOE Loss of Earnings
LOS Loss of Support
MoU Memorandum of Understanding
MTEF Medium Term Expenditure Framework
MVA Motor Vehicle Accident
PAIA Promotion of Access to Information Act, 2000 (Act No. 2 of 2000)
PAJA Promotion of Administrative Justice Act, 2000 (Act No. 3 of 2000)
PCOT Portfolio Committee on Transport
PFMA Public Finance Management Act, 1999 (Act No. 1 of 1999)
PMO Project Management Office
POPI Act Protection of Personal Information Act, 2013 (Act No. 3 of 2013)
RABS Road Accident Benefit Scheme
RABSA Road Accident Benefit Scheme Administrator
RAF Road Accident Fund
RAF Act Road Accident Fund Act, 1996 (Act No. 56 of 1996)
RRM Revenue Requirement Model
SDI South African National Civic Organisation Development Institute
Transitional Act RAF (Transitional Provisions) Act, 2012 (Act No. 15 of 2012)
INTRODUCTION
6 Road Accident Fund | Strategic Plan 2015 – 2020
FOREWORD BY THE MINISTER OF TRANSPORT
The history of the Road Accident Fund (RAF) and its predecessors spans more
than 60 years, and commenced with the introduction of compulsory motor vehi-
cle accident (MVA) insurance in 1946. Over the years, several problems pertain-
ing to equity, affordability and sustainability of the system developed.
During its lifespan, the MVA compensation system has been plagued by numerous challenges, including service delivery problems, restricted access to medical care, long settlement delays, spiralling costs, insufficient funding to pay claims, an ever-growing liability, multiple complex and legalistic hurdles due to the adversarial nature of the system, and uncertainty as to whether compensation is ultimately used for the intended purpose. The current scheme of arrangement being based on fault, insurance principles and common law, remains ineq-uitable, wasteful and open to abuse. Thus, the present MVA compensation system is in dire need of reform.
The transformation of the current scheme, as envisaged in the recently published Road Accident Benefit Scheme (RABS) Bill, will address many of the challenges facing the Fund that are constraining its ability to deliver on its mandate in an effective and efficient manner. This implies that accident victims will qualify for benefits regardless of who caused the accident. Benefits will also not be reduced based on the accident victim’s contributory negligence.
In addition, a ‘no-fault’, fixed benefit scheme will ensure smooth alignment with the Comprehensive Social Security System (CSSS) envisaged by Government. Once enacted, RABS will have a major impact on the RAF’s strategic imperatives.
The provision of road accident compensation or benefits could be regarded as a response to specific socio-economic risks, including: the need for trauma and other medical care; the risk of income loss due to injury; the risk of unemployment due to temporary or permanent disability; and the vulnerability of family members who become exposed to financial burdens and dependency when a breadwinner dies. The RAF’s Strategic Plan for the financial years 2015–2020 reflects the organisa-tion’s robust initiatives to reposition and fully align with nation-al priorities and social security principles.
In conclusion, the Strategic Plan outlines the RAF’s strategic outcomes, strategic objectives, key performance indicators, and annual targets up to 2020. The Department, therefore, supports the implementation of the Strategic Plan by the RAF.
Minister ED Peters, MP Minister of Transport Executive Authority, RAF
77Section 1 | Introduction
Legislative Environment
The central goals of the Road Accident Fund (RAF), namely service delivery in terms of its mandate, the opti-misation of its business and ultimately the sustainability of the Fund, rely significantly on the legislative environ-ment in which the organisation operates. The current legislative environment hinders rather than enables the Fund in the attainment of this vision, since it is based on fault and insurance principles. This means that drivers at fault are excluded from claiming for compensation. As a result, injured persons are unable to access medical care in a timely manner, and dependants of persons killed in road accidents are left to fend for themselves.
The claims procedure is cumbersome, time-consuming and expensive, and often results in litigation. Accident victims need to traverse complex legal hurdles in order to claim. This has led to the perception that claims can-not be lodged directly with the Fund and that legal ad-vice is almost a prerequisite. The Fund is thus distanced from the very people whom it is supposed to serve. By reason of the litigious nature of the system, the Fund is engulfed in legal disagreements with claimants, rather than endeavouring to accommodate their needs.
A number of important judgments have been handed down by the Courts in terms of which the Fund’s man-date and liability have been affected and the Fund has further adjusted tariffs in accordance with the legislative framework. In an attempt to ease the stated challeng-es, the Minister has drafted Regulations to limit the Fund’s liability and improve claimant access benefits. In addition, there is a number of pending Court cases that could have significant implications for the Fund.
INTRODUCTION BY THE CEO OF THE FUND
Financial Sustainability
Claims payments comprise the RAF’s largest expense item. Li-quidity is determined by the cash available after claims and other expenses have been paid out for a specific period. Liability is largely composed of outstanding claims that need to be settled, along with their associated costs. Whilst the value drivers may appear conceptually simple, they are driven by multiple other factors. Claims expenditure is influenced, for example, by wheth-er a claimant chooses to claim directly or to be represented by an attorney; awards made by Courts that determine precedent; the number of expert witnesses called; and the time taken from date of accident to date of finalisation of the claim. As a conse-quence of these revenue and cost drivers, the outstanding claims provision, which has been growing over the last three decades, has increased exponentially in recent years.
The Fund is dependent on the fuel levy income in order to pay claims; however, the determination of the fuel levy has little regard for the main drivers of the Fund’s claims expenditure, i.e. the number of accidents on the roads, number of vehicles driven, the volume and quantum of the benefits payable by the Fund, and various other economic factors such as the inherent inflation of the benefit levels. The prevailing disconnect between the fuel levy awarded by Government and the Fund’s operational cash requirements is the primary cause of the poor liquidity that is being experienced by the Fund from time to time. Furthermore, due to the current national economic climate, there is lower than expected petrol consumption. In addition, the increases in organisational performance and productivity have resulted in increased liquidity concerns for the RAF.
To this end, the Fund has developed a Revenue Requirement Model (RRM) that incorporates all of the above in order to sci-entifically and objectively determine the required fuel levy for
INTRODUCTION
8 Road Accident Fund | Strategic Plan 2015 – 2020
any given future accident year. The model projects the claim numbers, income statements, balance sheets and cash flow statements in order to estimate the future financial position of the Fund.
Due to its unsustainable financial model, the Fund has been running at a substantial deficit for more than three decades. Consequently, a number of outstanding (open and unpaid) claims have accumulated over time, representing a liability to the Fund. The provision for unpaid claims grows annually due to the expected growth in the cost of settling these claims and interest factors.
Since the provision for future claims exceeds the Fund’s asset base, the Fund remains technically insolvent and this results in the Fund using its cash reserves to cover the shortfall.
The Fund has implemented some mitigation measures to reduce the impact of the liquidity risk and these include: (a) Re-questing additional funds from the National Treasury and the Department of Transport (DoT) and proposing sufficient funds via the RRM; (b) Implementing stringent cash flow manage-ment practices; (c) Implementing cost containment measures; (d) Implementing the Supply Chain Management Turnaround Strategy; and (e) Working together with the DoT to introduce a more sustainable Road Accident Benefit Scheme (RABS).
Operational Environment
The Fund recognises that it is imperative to capacitate the organisation in order to address its most pressing performance areas, i.e. the reduction of the number of open claims and the promotion and fulfilment of direct claiming. Many of the targets outlined in this Plan are therefore focused on these two areas.
The Fund has commenced with the upgrading of its legacy Information Technology (IT) systems. The upgrading of legacy information system will continue over the medium term to ensure improved service delivery and accessibility to the RAF’s service offerings to all claimants.
Road Accident Benefit Scheme
Between 1999 and 2002, the Road Accident Fund Commis-sion enquired into the reasonableness, sustainability, afforda-bility and equity of the fault-based common law scheme (that had been in existence in South Africa since 1946) to compensate victims of road accidents. While the Commission determined that a legitimate, justifiable rationale existed for Government to fund and regulate a system to provide bene-fits exclusively for victims of road accidents, it concluded that the current system was inherently flawed and recommended transformation to a no-fault scheme based on social security principles.
Following the presentation of the Report of the Road Acci-dent Fund Commission, Government has made significant strides in the processes required to establish the RABS.
The benefits of the proposed RABS are:• Providing for a scheme that is reasonable, equitable,
affordable and sustainable;• Expanding access to benefits by removing the requirement
to establish ‘fault’ as a determinant to qualify for benefits;• Making available timely and appropriate healthcare
benefits based on a reasonable tariff;• Simplifying claims procedures;• Fewer exclusions from benefits; • Defined benefits which promote affordability;• Reducing disputes by removing the ‘fault’ requirement and
by providing pre-determined benefits; and• Alleviating the burden on our Courts through the establish-
ment of an internal appeal procedure.
The transformation of the current scheme, as envisaged in the recently published RABS Bill, will address many of the challenges facing the Fund that are constraining its ability to deliver on its mandate in an effective and efficient manner.
It is essentially against this background of transformation taking place in the dispensation through which victims of road accidents will be benefited and the need for the Fund to mitigate its unique challenges so as to sustain and optimise
99Section 1 | Introduction
the current system, that its 2015-2020 Strategic Plan has been developed.
Strategic Pillars
As an institution of Government, RAF’s mandate outlines its obligations towards the State and its people. This mandate supports and is directly informed by a higher purpose, namely to contribute directly to the rehabilitation of road accident victims and socio-economic balance of the coun-try in order for Government to meet its priorities.
The National Development Plan (NDP): 2030 is the primary policy framework for Government and provides the first layer of Government policy for the RAF to carry out its responsibilities and align its plans. The NDP provides a clear account of the challenges the country is facing, as well as the strategic choices that must be made to create a better life for all South Africans.
In order to achieve the objectives of the NDP, the RAF will continue to efficiently pay for claims/benefits and effec-tively rehabilitate victims of road accidents to restore social balance and reduce the burden of reliance on the State.
The Fund’s strategy over the next five years is anchored on the following seven pillars:• Efficient claims processing;• Accessible services;• Effective financial management;• Optimal ICT functionality;• Improved people management;• Administrative dispensation aligned to the RABS Bill; and• Assured control environment.
Each of these pillars aims to deal with specific challenges that the Fund faces. In addition, these will form the basis on which subsequent performance plans and operational plans will be developed.
Conclusion
This Five-year Strategic Plan was developed in alignment with the shift of Government to an outcomes-orientated monitor-ing and evaluation approach. The focus of the plan is therefore centred on results-based management. This approach involves people, resources and processes which are integrated in the delivery of the key strategic outcomes outlined above.
Aside from the considerable inefficiencies in the current scheme, the inevitable substitution of benefits between a man-datory social insurance scheme and the Fund necessitates its reform within the context of a comprehensive system of social security. Important outcomes of this reform process should be: the removal of unnecessary inefficiencies; the continued protection of access to medical care associated with all road accidents; and ensuring that families are financially protected from the loss of a breadwinner. These protections are particu-larly important in relation to unemployed and low-income groups.
A reform of the Fund holds many opportunities not only at en-tity level but within the context of a comprehensive system of social security. This could be achieved through the rationalisa-tion of benefits, eradication of a fault system, and the improve-ment in speedy access to medical treatment and rehabilitation.
Such a reform should see the Fund change its focus away from assessments of fault and liability and toward protecting the most vulnerable, which would include those who do not have financial protection against accidental death and disability.
Despite the challenges experienced thus far, I am confident that the Fund is well positioned to attain the outcomes envis-aged in this Strategic Plan.
Dr Eugene Watson Chief Executive Officer
INTRODUCTION
10 Road Accident Fund | Strategic Plan 2015 – 2020
It is hereby certified that this Strategic Plan:• Was developed by the RAF Management and Board under the guidance of the
Department of Transport (DoT); • Takes into account all the relevant policies, legislation and other mandates for
which the Fund is responsible; and• Accurately reflects the strategic outcome-oriented goals and objectives that the
Fund will endeavour to achieve over the period 2015 to 2020.
OFFICIAL SIGN-OFF
SignatureMs Yolande van Biljon
Chief Financial Officer: RAF
SignatureDr Eugene Watson
Chief Executive Officer
Approved by | SignatureDr Ntuthuko Bhengu
Chairperson of the Board: RAF
PART A
14 Road Accident Fund | Strategic Plan 2015 – 2020
1. Vision
The following values drive everything that we do and the manner in which we do it.To provide the highest standard of care to road accident victims and to restore balance in the social system.
3. Values
2. Mission
To provide appropriate cover to all road users within the borders of South Africa; to rehabilitate persons injured; compensate for injuries or death and indemnify wrongdoers as a result of motor vehicle accidents in a timely, caring and sustainable manner; and to support the safe use of our roads.
Diagram 1: Values of the RAF
We care for and support our customers.We care for and support each other.
UBUNTU
We offer solutions.We take responsibility for our actions.
SOLUTION FOCUSED
We execute our duties with dedication and fortitude while pursuing excellence across the business. We are driven by a desire to succeed which we realise through intelligent planning and and commitment to delivery.
EXCELLENCE
Doing the right thing with the least amount of resources. In our endeavours we strive to optimal output from the time, cost and effort invested.
EFFICIENCY
We commit to and demonstrate integrity, honesty, consistency and fairness in our actions and decisions.We model the highest standards of personal and professional behaviour.
WE TAKE PRIDE
1515Part A | Strategic Overview
4. National Policy Direction
The RAF’s vision is informed by its legislative mandate. As an institu-tion of Government, its mandate outlines its obligations towards the State and its people. This mandate supports and is directly informed by a higher purpose, namely to contribute directly to the health and socio-economic balance of the country in order for Government to meet its priorities.
The National Development Plan (NDP): 2030 is the primary policy framework for Government and provides the first layer of Govern-ment policy for the RAF to carry out its responsibilities and align its plans. The NDP provides a clear account of the challenges the country is facing as well as the strategic choices that must be made to create a better life for all South Africans.
The nine primary challenges as outlined in the NDP are:• Too few people work;• The quality of school education for black people is poor; • Infrastructure is poorly located, inadequate and under-maintained;• Spatial divides hobble inclusive development;• The economy is unsustainably resource intensive;• The public health system cannot meet demand or sustain quality;• Public services are uneven and often of poor quality;• Corruption levels are high; and• South Africa remains a divided society.
As a response to the above challenges, the NDP aims to improve health and broaden social protection by:• Improving the quality of public health care; • Lowering the costs of private health care; • Long-term vision for implementation of a comprehensive social
security system;• Social security reforms aimed at providing balance and
broadening coverage;• Alignment and rationalisation of social security institutions; • Short-term reforms focusing on broadening coverage of existing
social security benefits; and • Longer term priorities include mandatory savings, risk benefits
and health insurance.
The role of the RAF in the Wider Government and National Agenda
In order to achieve the objectives of the Nation-al Development Plan, the RAF will continue to efficiently pay for benefits/claims and effectively rehabilitate victims of road accidents to restore social balance. In addition, the RAF will promote effective governance, strong leadership and active citizenry by:• Continuing to improve services and
maintaining compliance;• Increasing levels of awareness on RAF offerings
and benefits;• Continuing to partner with other Government
departments to improve the State’s overall effectiveness and efficiency;
• Engaging with other MVA Funds, regionally and internationally to exchange best practice;
• Ensuring that the RAF is free of fraud and cor-ruption.
PART A
16 Road Accident Fund | Strategic Plan 2015 – 2020
5. Legislative Environment
5.1 Strategic Context of the FundThis section identifies several assumptions about external and internal environments that inform the strategic planning process. The global socio-economic conditions impacting the Fund, as well as the prevalence of road crashes, revenue constraints and how these taken collectively are impacting on the RAF’s ability to fulfil its mandate are discussed.
5.2 The Fund’s Business Model
The RAF’s current business model is fault-based; meaning drivers at fault are excluded from claiming for compensation. As a result, injured persons are unable to access medical care in a timely manner, and dependants of persons killed in road accidents are left to fend for themselves. In addition, claims are received and administered in a litigious and dispute-rid-den environment, and many cases take years to be finalised and paid. This prolongs hard-ship and severely impacts on the poor and vulnerable. This is challenging to the Fund as, from a health and economic perspective, it contradicts the Fund’s socio-economic role of re-integrating victims of road accidents into society and protect at-fault drivers and their families from financial ruin.
The crux of the Fund’s underlying business model is determined by the legislative en-vironment in which it operates. At present,
claims against the Fund for bodily injury and personal loss arising from road accidents are based on common law rules of delict and liability insurance principles. Inherent in the fault-based system are numerous difficulties, including long delays in accessing compensa-tion and high delivery costs.
The current business model of the Fund does not afford the organisation with the capac-ity to proactively gather and manage road accident and applicant information for better operational and financial planning. Efforts to collect information at the accident scene and/or to find and collect information as soon as possible after the accident are currently not sufficient. As a result, the Fund’s ability to proactively originate benefit applications on behalf of accident victims, and thereby improve processing efficiency and the quality of decision-making are not sufficient.
1717Part A | Strategic Overview
5.3 Legal Framework and Other Mandates
5.3.1 Schedule in Terms of the PFMA
The RAF is a juristic person established by an Act of Parliament, namely, the Road Accident Fund Act, 1996 (Act No.56 of 1996), as amended (RAF Act). It is listed as a national public entity in accordance with Schedule 3A of the Public Finance Management Act (PFMA). The RAF commenced operations on 1 May 1997, assuming at the time, all the rights, obligations, assets and liabili-ties of the Multilateral Motor Vehicle Accidents Fund.
5.3.2 Constitutional, Functional and Policy Mandates
The central goals of the Fund, being that of service de-livery and the optimisation of its business and ultimate sustainability are significantly reliant on the legislative environment in which it operates.
As mentioned above, the Fund was established by the RAF Act, section 3, which stipulates that “the object of the Fund shall be the payment of compensation in accordance with this Act for loss or damage wrongfully caused by the negligent driving of a motor vehicle”. The customer base of the Fund, therefore, comprises not only the South African public, but all foreigners within the borders of the country. The Fund provides two types of cover, namely personal insurance cover to accident victims or their families, and indemnity cover to wrongdoers.
5.3.3 Policy Mandate The Fund’s policy or operations touch on every level and sphere of Government. Social security and transport policy is set at national level; the provincial Government provides an essential framework in which hospital-based operations occur; and local Government provides, among other, an essential liaison with metropolitan police departments for crash scene investigation. Furthermore, the Exec-utive Authority provides the ultimate level of accountability and leadership for the Fund. The legislature is an essential liaison point for amendments to the Fund’s legislative mandate and the judiciary provides interpretation of the legislation.
In addition to the DoT, the Fund also works with the following Gov-ernment institutions:
National TreasuryDetermines the fuel levy, the Fund’s primary source of income
Department of Health
Delivers medical care and rehabilitation to victims of road traffic accidents
Department of Justice
Through the judicial system, provides the platform through which disputes between the Fund and claimants are settled
Department of Home Affairs
Provides the Fund with information to verify the identification of claimants
Financial Services Board
The Fund submits returns on claims liabilities and reserves
The Fund implements quarterly compliance processes to ensure that it remains abreast of changes in all applicable laws, rules, codes and standards that may impact on its operations. In addition, during the strategic planning process, the organisation assesses Governmental
PART A
18 Road Accident Fund | Strategic Plan 2015 – 2020
and other relevant policy statements and documents and uses these to provide an input to guide its planning processes. Recently, these have includ-ed the following, among others:• Government’s Transport Sector
Strategy;• The National Road Safety Strategy;• Batho Pele principles;• National Social Security Reform (Inter-
departmental Task Team);• The National Development Plan
(NDP) of the National Planning Commission (NPC);
• The National Growth Path;• Presidential Outcomes;• Financial Services Board (FSB)
requirements; and• Various national and international
policy advances in the field of road safety (for example, the United Nations Decade of Action for Road Safety 2011–2020).
5.4 Relevant Court Rulings
5.4.1 Promulgation of the Road Accident Fund (Transitional Provisions) Act, 2012 (Mvumvu and others vs. the Minister of Transport and the Fund)
The constitutionality of section 18 of the Amendment Act, the R25, 000 passenger lim-itation sections, was challenged soon after the promulgation of the Amendment Act by a number of claimants whose claims were limited under the RAF Act. The Constitu-tional Court, on 17 February 2011, ordered that sections 18(1) (a) (i), 18(2) of the RAF Act are inconsistent with the Constitution and invalid. The declaration of invalidity was, however, suspended to enable Parliament to remedy the defect.
Parliament remedied the defect through the promulgation of the Road Accident Fund (Transitional Provisions) Act, 2012 (Act No 15 of 2012) (the Transitional Act), which came into effect on 13 February 2013. Claimants whose claims arose under the RAF Act, prior to it being amended by the Amendment Act, and whose claims are limited by the R25,000 passenger limitation section, whose claims have not prescribed or been finally determined by settlement or Court order, have an election under the Transition-al Act to have their claims determined under the RAF Act (prior to its amendment by the Amendment Act), or to have the claim determined in accordance with a transition-al regime provided for in the Transitional Act.
The Fund currently administers claims under three different frameworks, the RAF Act, the Amendment Act and the Transitional Act. The central goals of the Fund, namely service delivery in terms of our mandate, the optimisation of our business and ulti-mately the sustainability of the Fund, rely significantly on the legislative environment in which the organisation operates. The current legislative environment hinders rather than enables the Fund in the attainment of this vision, since it is based on fault and insurance principles. It is challenging to achieve operational efficiency and effective-ness in a system that is complex, encourages litigation and focuses on the cause of the accident rather than the immediate medical and financial needs of victims.
On 8 February 2013, the DoT published the RABS Bill 2013 (the Bill) for comment. The Bill is aimed at providing for a new, effective, no-fault benefit scheme and the new administrator, the Road Accident Benefit Scheme Administrator (RABSA), to replace the current RAF and the fault-based compensation system administered by it.
1919Part A | Strategic Overview
5.4.2 The Law Society of South Africa and Others vs. the Minister of Transport and the RAF
The liability and procedural provisions of the Road Accident Fund Amendment Act, 2005 (Act No. 19 of 2005) (the Amendment Act) came into operation on 1 August 2008. Shortly afterwards, the Law Society of South Africa and ten other applicants brought an appli-cation challenging the constitutional validity of a number of the provisions of the Amendment Act and Regulations to that Act, also reviewing certain actions of the Minister of Transport taken in terms of the Amendment Act.
The application was heard in the North Gauteng High Court, Pretoria. All challenges and reviews were dismissed, apart from the challenge relating to the place of the lodgement of claims, with the Court find-ing that the relevant regulation must be read together with section 24 of the RAF Act.
The applicants applied for and were granted leave to appeal to the Constitutional Court against the findings of the High Court relating to the following:• The abolition of the common law right to claim the balance of
damages from the wrongdoer;• The limitation of the Fund’s liability for loss of earnings and support;
and • The medical tariff for non-emergency medical treatment.
Judgment was delivered by the Constitutional Court on 25 November 2010. The Court dismissed the challenges to the abolition of the com-mon law right and the limitation for loss of earnings and support. The Court held the non-emergency medical tariff to be inconsistent with the Constitution and made an order that the Minister of Transport may prescribe a new tariff.
Pending the Regulation of a revised tariff, the liability of the Fund for non-emergency medical treatment has reverted to the position prior to the Amendment Act, being that the Fund is liable for the reasona-ble cost of necessary treatment.
5.4.3 Road Accident Benefit Scheme (RABS)
The current scheme of arrangement being based on fault, insurance principles and common law, remains inequitable, wasteful and open to abuse. The trans-formation of the current scheme, as envisaged in the recently published Road Accident Benefit Scheme (RABS) Bill, will address many of the challenges facing the Fund that are constraining its ability to deliver on its mandate in an effective and efficient manner. In addition, a ‘no-fault’, fixed benefit scheme will ensure smooth alignment with the Comprehensive Social Security System (CSSS) envisaged by Government.
The benefits of the proposed RABS are:• Providing for a scheme that is reasonable, equitable,
affordable and sustainable;• Expanding access to benefits by removing the
requirement to establish ‘fault’ as a determinant to qualify for benefits;
• Making available timely and appropriate healthcare benefits based on a reasonable tariff;
• Simplifying claims procedures;• Wider cover to persons injured in road accidents;• Fewer exclusions from benefits; • Defined benefits which promote affordability;• Reducing disputes by removing the ‘fault’
requirement and by providing pre-determined benefits; and
• Alleviating the burden on our Courts through the establishment of an internal appeal procedure.
The Bill was first published for public comment on 8 February 2013 in Government Gazette No.36138. Following receipt of public comments, the Bill was redrafted. New Regulations, Rules and Forms were also drafted to enable a better understanding of how the proposed scheme would operate in practice. The
PART A
20 Road Accident Fund | Strategic Plan 2015 – 2020
DoT published the redrafted version of the Bill in Government Gazette No. 37612 on 9 May 2014.
Interested persons were invited to submit comments within 60 days of publication. The comment period was subsequently ex-tended by 90 days to allow interested parties more time within which to submit comments.
A national RABS workshop was held on 19 June 2014. Focused stakeholder engagements were held on 25, 27 and 30 June with commuter groups, insurance groups, people with disa-
bilities, the funeral industry, the legal profession and medical industry.
Provincial RABS consultation sessions were held during Sep-tember in the Eastern Cape (Zwelitsha, King Williams Town and Port Elizabeth), KwaZulu-Natal (Empangeni, Pietermaritzburg and Durban), the North West (Mahikeng, Rustenburg and Potchefstroom), Limpopo (Giyani and Polokwane), the North-ern Cape (Upington and Kimberley), the Western Cape (Cape Town, Vredenburg and George), the Free State (Kroonstad and Mangaung), and Gauteng (Springs and Soweto).
5.4.4 Other relevant court rulings that may have an impact on the Fund’s liability
A number of important judgements have been handed down by the Courts in terms of which the Fund’s mandate and liability have been affected. The Fund has further adjusted tariffs in accordance with the legislative framework. The Minister has further made Reg-ulations to limit the Fund’s liability and improve claimant access benefits. In addition, there is a number of pending Court cases that could have significant implications for the Fund. Regulatory revisions based on the current Act, recent judgements of the Courts and the pending Court cases are summarised in the table below:
Regulatory Revision
Pending Court Cases
Judgment Delivered Details
Adjustment to the emergency medical tariff provided for in section (17 4B)(b) of the Act
The Fund adjusted the tariff retrospectively from 1 April 2013.
R & M Combrink v Road Accident Fund; D De Jager v Road Accident Fund; L Tsoba v Road Accident Fund, L J Moeketsi v Road Accident Fund.
Regulation 2 (3) of the pre-1 August 2008 Act provides for a two-year prescrip-tion period in respect of hit-and-run claims. It is alleged that the regulation is inconsistent with the Constitution and that the two-year prescription period is ultra vires. The Fund is considering strategy.
2121Part A | Strategic Overview
Regulatory Revision
Pending Court Cases
Judgment Delivered Details
MK Mahano, MG Kubjana and RS Thomsen v Road Accident Fund and the Minister of Transport
The Plaintiff alleges that the publication of operational guidelines is a prereq-uisite for the application of the AMA Guides and/or the regulations and that the Court has authority to interfere with the Fund’s decision to reject the RAF 4 form.
These declaratory applications were brought solely to avoid referring matters to the Appeal Tribunal for adjudication and to require the Courts to resolve these disputes despite the Regulations setting out a dispute resolution mechanism.
The Fund was successful in defending this matter and the Court held that:
The publication of operational guidelines was not a prerequisite for the appli-cation of the AMA Guides and/or regulations and the Court has no authority to interfere with the Fund’s decision to reject the RAF 4 form.
Plaintiff applied for leave to appeal and the application for leave to appeal was heard on 22 November 2013. The leave to appeal was dismissed with costs. Plaintiff petitioned the Supreme Court of Appeal (SCA) for leave to appeal and the Fund opposed this matter. The matter is set down at the SCA for 9 March 2015.
NP Fakude & 46 Others v Road Accident Fund and Minister of Transport
In this matter the Plaintiffs instituted legal proceedings against the Fund and the Minister of Transport for an order declared to be unconstitutional and in-valid: The requirement of at least 30% WPI and /or the requirement of a serious long-term impairment or loss of a body function or permanent serious disfig-urement or severe long-term mental or behavioural disturbance or disorder in order to qualify for general damages; and the proviso to section 17(1) read with section 17(1A) and section 21 read with section 19(a), abolishing the plaintiffs’ common law rights to claim general damages from the wrongdoer and the statutory right that existed prior to 01 August 2008 to claim general damages from the Fund, first to a maximum of R25 000, 00, and putting nothing at all in its place, whilst providing a disparity of treatment for those passengers subject to the provisions of the Transitional Act who are entitled to an award of R25 000, 00.
The claimants are alleging that they are unjustly and unfairly being preclud-ed from receiving compensation for pain and suffering; and prevented from exercising their common law rights in order to claim general damages from the owner of the bus in which they were passengers.
The matter was defended and counsel has been instructed to draft a plea.
RAF v L Sweatman In this matter a dispute centred on the calculation of the estimated Future Loss of Income of the injured minor. The dispute involved the interpretation and application of Section 17(4) (c) and how the ’actual loss’ should be actuarially calculated. Presently there are conflicting judgments in different divisions re-sulting in different calculation methods. The Fund applied for leave to appeal to the SCA and the matter will be heard by five Appeal Judges on 10 March 2015.
PART A
22 Road Accident Fund | Strategic Plan 2015 – 2020
Regulatory Revision
Pending Court Cases
Judgment Delivered Details
Y Chotia v Road Accident Fund and the Minister of Transport and 9 others
The Fund was served with an application for an order in the following terms:
Review of the Appeal Tribunal decision; the Fund’s objection is not valid; the AMA guides are inappropriate, ultra vires and/or unconstitutional; Regulation 3(d) of the Road Accident Fund Act 56 of 1996 be subject to reasonable time parameters and that reasons should be provided for a rejection in terms of Regulation 3(3) (d)(i) be provided.
This review is slightly different in that it alleges that the AMA guides are ultra vires/unconstitutional. The Fund’s replying affidavit was served and filed. Plaintiff has agreed the only issue to be dealt with is whether Plaintiff sustained a serious injury. The Constitutional issues will be pended.
Z G Magayiyana v Road Accident Fund and the Minister of Transport and 9 others
The Fund has been served with an application for an order in the following terms:
Review of the Appeal Tribunal decision; the Fund’s objection is not valid; the AMA guides are inappropriate, ultra vires/unconstitutional; Regulation 3(d) of the Road Accident Fund Act 56 of 1996 is subject to reasonable time parameters; that reasons for a rejection in terms of Rule 3(3)(d)(i) be provided.
This review is slightly different in that it alleges that the AMA guides are ultra vires/unconstitutional. This matter is similar to the matter of Yusuf Chotia v Road Accident Fund Appeal Tribunal, Road Accident Fund, Minister of Transport and others. The settlement in this matter will follow the principle dealt with in the matter of Chotia. The matter is being held in abeyance pending the outcome of the Chotia matter which deals with similar issues.
G W De Waal v Road Accident Fund and the Minister of Transport and 10 others
The Fund has been served with an application for an order in the following terms:
Review of the Appeal Tribunal decision; the Fund’s objection is not valid. The AMA guides are inappropriate, ultra vires/unconstitutional; Regulation 3(d) of the RAF Act 56 of 1996 is subject to reasonable time parameters. That reasons should be provided for a rejection in terms of Rule 3(3) (d)(i).
This review is slightly different in that it alleges that the AMA guides are ultra vires/unconstitutional. This matter is similar to the matter of Yusuf Chotia v Road Accident Fund Appeal Tribunal, Road Accident Fund, Minister of Transport and others. The settlement in this matter will follow the principle dealt with in the matter of Chotia. Matter held in abeyance pending the outcome of the Chotia matter which deals with similar issues.
CL Jeftha & others v Road Accident Fund and The Minister of Transport
Section 19 (g) of the post-1 August 2008 Act excludes the Fund’s liability where damages or loss resulting from secondary emotional shock, being when a person is not physically injured in a road accident, but suffers shock due to witnessing or learning of the accident. Mr. Jeftha alleges that he suffered emotional shock after witnessing his grandson being killed in a road traffic accident. He is applying for section 19 (g) of the post-1 August 2008 Act to be declared constitutionally invalid. A date for the hearing is still awaited.
2323Part A | Strategic Overview
6. Situational Analysis
6.1 The Draft National Road Safety Strategy
South Africa participates in the World Health Organisation’s (WHO’s) campaign themed the ’Decade of Action for Road Safety’ together with other countries in Sub-Saharan Africa and the rest of the world, who have undertaken to increase countermeasures to reduce road safety fatalities, particularly during this decade 2011-2020, and it is for this reason that this strategy speaks to those commitments and timelines.
Countries were asked to prepare a country plan of activities for the decade, using the WHO’s framework with the following pillars: • Road safety management • Infrastructure • Safe vehicles • Road user behaviour • Post-crash care
The Fund is a key strategic partner in the implementation of the National Road Safety Strategy. Road fatalities are one of the major factors that drive the costs of the Fund.
The Fund is expected to support some of the key aspects of this integrated strategy, more specifically the improvement of post-crash care to reduce the number of deaths and disabling injuries. Pillar 5 of the Global Plan for the Decade of Action for Road Safety 2011–2020 emphasises the following:• The training of community members in first aid to assist in
post-crash trauma in their own communities;• The development of incident management systems on
national and provincial roads; and• The development of guidelines for hospital trauma care to
reduce fatalities and the potential permanent disablement caused through injuries.
A strategy to address the Decade of Action’s five pillars has been developed, taking into account the scope of the Fund’s
mandate and processes. The Fund’s Road Safety Strategy incorporates all five pillars mentioned above. It also out-lines the Fund’s contribution and interventions undertaken to address issues pertaining to infrastructural require-ments.
The Fund has in the 12/13 financial year formed a partner-ship with the South African National Civic Organisation Development Institute (SANCO SDI) wherein a project has been initiated to identify hazardous spots and implement interventions such as mending potholes and erecting speed-calming measures (speed humps).
To address issues pertaining to the post-crash care pillar above, the Fund is currently developing a five-year plan to operationalise post-claim settlement processes, with the aim of improving the services offered under this pillar and render it more efficient and effective.
The Road Safety Strategy also maps out how the Fund intends to contribute and partner with other transport entities on issues pertaining to road safety management, safe vehicles and road user behaviour.
The WHO recommendations call for road safety to be con-sidered as a global policy issue and have called for interna-tional collaboration to be strengthened, and also encourage cooperation between international organisations, Govern-ment, Non-governmental Organisations and private sector entities. It also recognises that current levels of investment are inadequate to deal with the current risk factors.
The full roll-out of initiatives to enhance the operational efficiencies of the Fund will ensure access to healthcare and access to financial assistance by all communities, in support of the National Road Safety Strategy.
PART A
24 Road Accident Fund | Strategic Plan 2015 – 2020
6.2 Service Delivery Environment
The socio-economic role of the RAF augments its legal man-date and frames the important position it occupies in the provision of contributory social insurance within the social security environment. This socio-economic role of the RAF is to reintegrate victims of road accidents back into society from a health and economic perspective and to protect wrongdoers and their families from financial ruin.
Claims payments comprise the Fund’s largest expense item. Liquidity is determined by the cash available after claims and other expenses have been paid out for a specific period. Liabil-ity is largely composed of outstanding claims that need to be settled, along with their associated costs. Whilst the value driv-ers presented may appear conceptually simple, they are driven by multiple other factors. Claims expenditure is influenced, for example, by whether a claimant chooses to claim directly or to be represented by an attorney; awards made by Courts that set a precedent, the number of expert witnesses called, and the time taken from date of accident to date of finalisation of the claim. As a consequence of these revenue and cost drivers, the outstanding claims provision, which has been growing over the last three decades, has increased exponentially in recent years.
In the 2013/14 financial year 147,168 claims (personal claims: 53,230 and supplier claims: 93,938) were registered, 240,783 claims (personal claims: 115,736 and supplier claims: 125,047) were finalised and 232,285 (personal claims: 215,665 and supplier claims: 16,620) were still outstanding. Of the 232,285 claims, there were 198,140 where compensation payments (open and reopened claims) and 34,145 legal cost payments were still outstanding at the end of the 2013/14 financial year (which is indicative of the large number of compensation pay-ments now being made which awaits further cost payments).
Of the 240,783 total claims finalised in the financial year, a large number of claim payments were at values less than R10, 000.
This can be ascribed to the accelerated approach to supplier claims, which allowed for hospitals and other service providers to be paid directly by the RAF. As a result, the RAF managed to reduce outstanding supplier claims more effectively than that of personal claims.
The RAF continues to receive and settle high volumes of small claims, with more than 87% (average of pre- and post-Amend-ment Act claims) being for settlement values below R50, 000.
The number of open personal claims reduced noticeably by 17% in the last financial year and is reflective of the early fruits of the strategic and operational plans being implemented.
The ability of the Fund to achieve the desired outcomes is hampered by a number of challenges. These challenges are illustrated and discussed in detail below:
The strategic goals contained in this Plan (Part B) that will be pursued and implemented over the upcoming budget year and the next two years of the MTEF, seek to mitigate the nega-tive effects that the challenges have on the ability of the Fund to deliver on its mandate in line with its vision and mission.
The Fund has commenced the upgrading of its legacy IT sys-tems, and the litigation management system. These develop-ments will continue over the medium term to ensure improved service delivery and accessibility to RAF’s service offerings to all the claimants and enable the RAF to operate more efficiently.
6.2.1 Claims ValuesThe composition of claim payments continues to reflect the inadequacies of the existing fault-based, common law system of compensation. The introduction of a no-fault system (RABS) should address these wastages over the longer term. In the short term, interim legislative changes could address some of
2525Part A | Strategic Overview
the wastages. Of the R22.2 billion cash paid out in respect of claims expenditure for the 2014 financial year, R17.6 billion (i.e. 79%) comprised of capital pay-out. The balance of 21% (2012/13: 25%) comprised of legal and other expert fees.
There has been a positive reduction in legal and other expert fees when compared to total expenditure. New claims registered decreased by 2% in 2013/14; 13% in 2012/13 and 22% in 2011/12. Claims finalised increased by 49% in 2013/14 from the 162,130 recorded in the 2012/13 financial year to 240,783 in 2013/14. Repudiated claims decreased from 29,937 in the 2012/13 financial year to 15,736 in the 2013/14 financial year. The decline in repudiations was due to reviewing the claims processing status of all claims on an on-going basis.
A full audit was done to determine the exact composition of the number of outstanding claims. The audit data assisted in identifying the claims processing life cycle and determining the actions to be taken to facilitate settlement. Claims had been split into logical groupings and were fast-tracked to settlement. Direct claims received special attention in this regard. Validity checks were also performed ensuring that potential fraudulent files were uncovered and investigat-ed. The numbers of outstanding claims were identified for immediate settlement. A dedicated unit was established and tasked with the elimination of outstanding claims. Plaintiff attorneys were also engaged by the RAF with regard to block settlement of claims.
6.2.2 Age Analysis of ClaimsClaims younger than one year decreased from 38% in 2013 to 29% in 2014. The bulk of claims outstanding at year-end were mainly claims older than three years, which is indicative of the difficulties faced when claims are litigated and require extensive expert opinion and time in Court. As at 31 Decem-
ber 2014, personal claims older than three (3) years constituted 42.2%, with 13.2% ranging from ages two to three years.
6.2.3 Ruling on Ronald Bobroff & Partners
Notwithstanding the provisions of the Contingency Fees Act, certain Law Societies made provision in their rules for members to charge in excess of the percentages prescribed by the Act. Many attorneys disregarded the law and the fundamental rights of victims of road accidents. Following various Court rulings that these common law contingency agreements could not exceed 25%, one law firm proceeded to elevate the appeals right up to the Constitutional Court. On 20 February 2014, the Constitution-al Court delivered judgment in respect of the constitutionality of the Contingency Fees Act. The issue was whether it is justifiable for personal injury lawyers to charge contingency fees outside of what the Act provides. Personal injury lawyers typically assist road accident victims to claim from the RAF.
The judgment was in respect of two interwoven cases. The first was that of Ronald Bobroff & Partners who challenged a Full Bench of the North Gauteng High Court who had ordered them to provide an itemised account to Ms Juanne De la Guerre and to refund what they had overcharged her. The second was that of the South African Association of Personal Injury Lawyers (SAAPIL), of which Bobroff is the president, which challenged the constitutionality of the Contingency Fees Act. Both cases were heard simultaneously by the Full Bench of the High Court.
The Constitutional Court found no merit in Bobroff and SAAPIL’s challenge as a whole, dismissing the argument that the Contingency Fees Act was irrational because it applied only to lawyers. In handing down judgment, the Court pointed out: “The right of access to justice is that of the legal practitioner’s clients, not that of the legal practitioners themselves.”
PART A
26 Road Accident Fund | Strategic Plan 2015 – 2020
6.3 Revenue and CostThe Fund is affected by general economic conditions and other environmental factors, and by the extent to which it manages its costs effectively. These factors are illustrated in the figure below:
Road Activity
Levy on fuel
Financial position
Volume of claims
Value of claims
Revenue
Cost
Fuel sold
Number and severity of accidents
Administrative costs
Third-party costs
Grants and investment
revenue
FigureFactors influencing the Fund’s financial position
The primary source of income for the Fund’s compensa-tion scheme is a levy raised on fuel. The levy is measured in terms of cents per litre on petrol and diesel fuel sold in South Africa and forms part of the general fuel tax regu-lated by Government.
The fuel levy per litre is set by National Treasury on a yearly basis, whereas total fuel sales are influenced by a number of macroeconomic factors. On an annual basis, the Fund requests National Treasury for an increase in the RAF Fuel Levy, based on a financial model and a calcula-tion of its costs during the coming year. The full extent of the RAF Fuel Levy requested is seldom granted. This is because National Treasury has historically set the levy on the basis of a pay-as-you-go principle rather than with the purpose of establishing a fully funded position for the Fund. During the 2015 financial year, the Fund Fuel Levy was set at 1.04 cents per litre.
The Fund is not involved in the collection of the Fuel Levy. The South African Revenue Service (SARS) administers the collection of the Fuel Levy and pays it to the Fund, in accordance with provisions of the Cus-toms and Excise Act, 1964 (Act No. 91 of 1964) and the RAF Act.
The two main variables that determine the income of the Fund are the volume of petrol and diesel sold per annum and the rate of the levy. The RAF Fuel Levy can be viewed as a compulsory contribution to social security benefits which is used only for the specific purposes as provided for in the legislation.
The costs that the Fund incurs are as a result of road accidents. The volume and severity of accidents influence the volume and average value of claims made against the Fund.
In addition, the Fund’s cost consist of (1) third-party costs (e.g. attor-ney costs, medical and/ or legal expert costs), as well as (2) the Fund’s administration costs.
2727Part A | Strategic Overview
6.4 Key Value Drivers of the Fund
Claim payments comprise the Fund’s largest expense item. Liquidity is determined by the cash available after claims and other expenses have been paid out for a specific peri-od. Liability is largely composed of outstanding claims that need to be settled, along with their associated costs.
Whilst the value drivers presented may appear conceptual-ly simple, they are driven by multiple other factors. Claims expenditure is influenced, for example, by whether a claimant chooses to claim directly or to be represented by an attorney; awards made by Courts that set a precedent, the number of expert witnesses called and the time taken from date of accident to date of finalisation of the claim. As a consequence of these revenue and cost drivers, the gap between the Fund’s deficit and its income, which has been growing over the last three decades, has increased exponentially in recent years.
The nexus of all these factors is road activity in South Africa described below:
• Fuel levy• Volume of
fuel sold
Revenue
• Number of claims
• Claims expenditure
Expenditure
• Outstanding claims provision
• Cash available
Statement of Financial
Position RAF Key
Value Drivers
6.4.1 Road Activity and AccidentsRoad crashes have adverse implications for the economic growth, affecting economically active members of our society and others.
Globally, road traffic injuries are the eighth leading cause of death, and, current trends suggest that death due to road traffic accidents will be the fifth leading cause of death by 2030 if no urgent action is taken. In 2011, the African region was ranked the highest in terms of the number of deaths due to road accidents reported, with a rate of 24.1 road traffic deaths per 100 000 population. The WHO has identified road traffic injuries as one of the major risk factors in South Africa with transport accidents ranking as the third leading non-natural cause of death, constituting 1% of the total deaths recorded in 2011. Between 1990 and 2011, the number of road fatalities increased by 25%, peaking in 2006 with 15,419 road fatalities.
As from 2000, more than 10,000 fatal crashes and fatalities were recorded on a yearly basis. Since 2006, the number of fatalities has decreased by 10%. Rapid urbanisation and mo-
FigureKey value drivers of the Fund
PART A
28 Road Accident Fund | Strategic Plan 2015 – 2020
torisation are major factors to consider in respect of road fatalities. In 2011, there were 28 road fatalities for 100,000 populations, which was among the highest rates worldwide. However the rate has declined from 36.7 in 1990 to 27.58 in 2011. Pedestrians are particu-larly vulnerable, and represent more than 35% of all reported fatalities. The most vulnerable road users are those in the 15-44 age group, with the highest fatality rate recorded at age 25-34.1
The United Nations General Assembly has proclaimed 2011–2020 the Decade of Action for Road Safety. South Africa is one of the member countries that has committed itself to the Decade of Action and as part of the declaration has committed to reducing the number of road deaths by half by 2020. While road fatalities per 100,000 people are reducing in South Africa, the ven-ture to instil a culture of road safety and road traffic law compliance is an arduous one. While South Africa strives to achieve a reduction in road traffic accidents, and by extension a reduction in road traffic fatalities and injuries, many thousands of people will continue to suffer losses due to death or injury on our roads. The primary risk group is men in the 18 to 45 age group, whose injury or death often have devastating impacts on the families relying on them for support. The Fund is often all that stands between the victims and their
1 Source: WHO Global Status Report on
Road Safety 2013 # IRTAD 2013 Annual
Report # mortality and causes of death in
South Africa, 2011: Findings from death
notification.
families and a descent into poverty, as many victims are unable to afford medical aid or private insurance cover.
In light of the profound negative impacts that victims of road traffic accidents suffer from a health, vocational and social perspective, they not only require, but deserve to have their claims against the Fund assessed and finalised in a speedy and efficient manner. Delays in claims finalisation prejudice victims, and also serve to increase the Fund’s liability as historical trends have shown that generally the later a claim is final-ised, the higher the liability of the Fund. In light of the above the Fund has resolved to place more focus on settling long outstanding claims.
The underlying outcome of the sum of the indicators and targets in this Plan is for the Fund to be an accessible organisation that pro-actively interacts with victims in a car-ing, supportive and solution-orientated manner. The Fund must provide compensation in a time-efficient and cost-effective manner, while continually exhibiting the highest standards of financial and risk management.
The Fund recognises that it is imperative to capacitate the organisation in order to address its most pressing performance areas, i.e. the reduction of the number of open claims and the promotion and fulfilment of direct claiming. Many of the targets out-lined in this Plan are therefore focused on these two areas.
2929Part A | Strategic Overview
• Subjectivity• Complexity • Inequities• Wastages• Unpredictable• Unreliable• Perverse incentives• Delays• Adversarial relationships
Issues common to all delictual systems
• High accident rates• Scheme is open to fraud• Strong interest groups with
conflicting views• Lack of integration between
role players• High degree of fragmentation
in the industry• Unsustainable economic
model
Environmental issues
• Increasing deficit• Inability to process claims
and reduce backlogs within a short period
• Increasing legal costs• Delayed payment of claims• Fraud and corruption• Culture change to
customer-centricity
Internal challenges
• Income and expenditure not linked
• Unaffordable• Inhibited by legislation and
precedent• No established institutional
framework• Presence of contingency fees• Inappropriate allocation of
resources
Issues specific to South African system
6.5 Key Challenges Facing the FundThe effective functioning of the Fund is hampered by a number of factors. These factors can be divided into the following four categories:
• Issues that are common to all delictual-based systems;
• Issues specific to the South African system;
• Environmental issues; and • Internal challenges faced by the
Fund.
The table to the right highlights challenges that have the highest negative impact on the Fund’s ability to be financially sustainable, opera-tionally effective and customer-cen-tric. These challenges are briefly discussed below.
6.5.1 Systemic Flaws
Grounded in Delict
The Fund’s liability is founded on principles of the law of delict and is partially gov-erned by common law, statutory provisions and legal precedent. This system has failed to meet the needs of the public in that it is not only complex and arbitrary, but also time-consuming, expensive, open to abuse and wasteful. It is also fraught with practical difficulties, and the outcome is unpredictable and unreliable.
Subjectivity
Both the determination of fault and the extent of damages suffered by victims are overwhelmingly subjective. To determine fault, it is necessary – many years after the accident – to rely on the memories of witnesses to an event that occurred un-expectedly and quickly. The recall of witnesses is often nothing more than conjec-ture and often pure inventiveness.
The determination of compensation is also subjective. The extent of compensa-tion that a claimant will receive is based on predictions of the future. Predictions must be made as to the level of education that would have been achieved if the accident had not occurred and the level that will be achieved having regard to the
PART A
30 Road Accident Fund | Strategic Plan 2015 – 2020
accident, as well as pre- and post-accident earning capacity, life expectancy and future inflation and investment rates. All these factors are inherently unknown and often amount to nothing more than crystal ball gazing.
Expert witnesses, whose opinions form the basis of deter-mining the level of damages, are briefed by the adversarial parties and not by the Court. While such witnesses are meant to be witnesses of the Court, the reality is that many “experts” consider themselves to be the witness of the party by whom they have been briefed and “have become a very effective weapon in the party’s arsenal of tactics.”2 Far too many “expert witnesses” have become full-time professional witnesses and are financially reliant on receiving continuous instructions from attorneys. This often translates into these witnesses subjective-ly advancing the contentions of the party by whom they are instructed, rather than playing an independent role.
Complexity
The delictual basis of the system introduces unnecessary and burdensome complexity. The claims procedure is cumbersome, time-consuming and expensive, and often results in expensive litigation.
Accident victims need to traverse complex legal hurdles in order to claim. This has led to the perception that claims cannot be lodged directly with the Fund and that legal advice is almost a prerequisite. The Fund is thus distanced from the people whom it is supposed to serve. By reason of the litigious nature of the system, the Fund is engulfed in legal disagree-ments with claimants, rather than endeavouring to accommo-date their needs.
Unpredictable and Unreliable
“The delict liability system is so unpredictable and unreliable in
2 Report of the Road Accident Fund Commission: 2002. Vol. 2,
Chapter 24, par 24.122, p.732.
that no injured person can be sure of receiving compensation and planning his personal finances accordingly.”3 Victims of accidents may for years after the accident not know if they will receive compensation, or the extent of the compensation that will be paid. This uncertainty can give rise to stress that will inevitably delay the rehabilitation of victims.
Inequities
A delictual system of compensation has numerous inequities, including the following:• The poor are less able to access the system as they do not
have the financial outlay to pay the costs linked to proving a claim;
• The structure of the compensation scheme leads to unreasonable cross-subsidisation, for example, between low-income earners and high-income earners, and multi-passenger vehicles and single-passenger vehicles;
• The poor receive less compensation than the rich, yet pay the same premium (standard fuel levy) for the cover; and
• Foreigners, who have short stays in the country and con-tribute very little by way of premiums (fuel and diesel levy), receive the same level of cover as South African citizens.
High Delivery Costs
Delivery costs enrich the facilitators and not the victims of road accidents. The delictual system is by its very nature adversarial and encourages litigation.
The table on the next page summarises payments towards claimants’ legal costs and the Fund’s own legal costs over a period of seven financial years.
3 Report of the Road Accident Fund Commission: 2002. Vol. 1,
Chapter 14, par 14.29, p.356.
3131Part A | Strategic Overview
Legal costs2008 2009 2010 2011 2012 2013 2014
Rand (billion)
Claimant 1,280 1,600 1,700 2,194 2,300 2,300 2,900
RAF 811 900 1,000 1,223 1,300 1,400 1,700
Total 2,091 2, 500 2 ,700 3 ,417 3,600 3,700 4,600
TableLegal and expert costs
Legal expenses have exceeded medical compensation paid by the Fund over the last 12 years. This clearly shows that scarce resources are consumed in complex, time-consuming and costly legal processes, rather than appropriated to assist the injured to recover, rehabilitate, heal and resume their econom-ic activities.
The Satchwell Commission concluded that “there is no doubt that it is completely unacceptable that such a significant pro-portion of fuel levy income is currently expended on transac-tion costs rather than on compensation or benefits and that a further portion of compensation or benefits paid out is utilised to meet outstanding transaction costs”.4
Perverse Incentives
Compensation that covers the total loss of earnings and pro-jected future potential earnings in a single payment contrib-utes to over-compensation for minor injuries and under-com-pensation for serious injuries.5 It also discourages injured road users from entering rehabilitation and returning to work, as
4 Report of the Road Accident Fund Commission: 2002. Vol. 1,
Chapter 12, par 12.127, p. 307.
5 Report of the Road Accident Fund Commission: 2002. Vol. 1,
Chapter 17, par 17.7, p. 430.
victims will receive less compensation should they be more fully rehabilitated. There is thus an incentive to undermine the efficacy of rehabilitation or to attempt to defraud the Fund by understating the effectiveness of rehabilitation and deliberate-ly failing to return to work when one is simply able to increase the claim for loss of earnings.
Adversarial Relationships
From the time the claim is lodged until it is finalised, the Fund is involved in an adversarial relationship with the very claim-ants it is meant to be helping. The fact that most claimants are represented by attorneys means that the Fund does not even meet the persons it has been established to assist. As the Fund is prohibited from paying compensation until liability has been established, it means that it is usually not able to provide funds to enable injured road users to access hospitals and medical care. Even once liability has been established, disputes as to the level of damages suffered can often take years to resolve.
Those who are unable to work receive no immediate assis-tance, and they and their families face hardship on diminished or no income. The scheme fails to support persons injured in road accidents at the time when they most need it, and claim-ants are largely left to their own resources.
PART A
32 Road Accident Fund | Strategic Plan 2015 – 2020
6.5.2 Systemic Issues Specific to South Africa
Premiums and benefits are not linked and economic model is unsustainable
The present compensation system is financed primarily by a dedicated levy on fuel sold. The funding method is theo-retically on a pay-as-you-go (PAYG) basis, whereby income is provided when the benefits are payable, rather than set aside when the accidents and liability to pay are incurred, as is the case under a fully funded scheme. In the current compensa-tion scheme, income or assets are not set aside to meet claims incurred in each financial year.
The Satchwell Commission found that “the absence of any rela-tionship between the fuel levy and the compensation to which a victim may be entitled is not economical and is therefore unaffordable”.
Scheme is open to fraud
The Fund is confronted by two types of fraud, i.e. systemic and opportunistic fraud. The cost of fraud is not limited merely to fraudulent claims either, but there is an additional cost attached to the extensive fraud prevention strategies and sys-tems implemented by the Fund over recent years.
6.5.3 Environmental Challenges
High accident rate
South Africa has an exceptionally high number of fatalities related to road accidents, even when compared to other devel-oping countries. The high accident rate places an unreasonably high economic burden on the country, especially when one
considers that a country such as Australia, which has less than a third as many road accident fatalities (per capita) as South Africa, has a much higher per capita income than South Africa does. Thus, the Fund has to support a relatively higher number of accident victims in a much poorer environ-ment.
Lack of integration between role players
The Fund experiences difficulties in accessing or obtain-ing the information required to assess claims. Many of the problems related to information arise because of the lack of integration between the various role players in the indus-try. Each of the organisations involved in the process from accident to rehabilitation (including the Road Traffic Man-agement Corporation, Department of Health, South African Police Service, Metro Police and the Department of Justice and Constitutional Development, among others), collects and maintains pieces of information relating to its role in the system. However, there is no formal way in which this information is shared. This lack of integration hampers the delivery of effective and efficient services and the forecasting of the actual liability. The Promotion of Access to Information Act, 2000 (PAIA) further inhibits the sharing of information between the Fund and other role players.
Fragmentation of the industry
Several role players within the Transport, judiciary (legal) and health fraternities, each with different responsibilities and authority, all operate in the same space. This lack of inte-gration complicates matters. However, even if there were to be full integration and information-sharing or collection, it would still be problematic to have many small organisations with overlapping and/or interrelated policy objectives, but no broad oversight or coordination.
3333Part A | Strategic Overview
Strong interest groups with conflicting views
The current system has created powerful vested interests in the organisation (such as large groupings of the legal fraternity), who oppose any attempt to reform the system.
6.5.4 Internal Challenges
Fraud and corruption
Fraud and corruption are major challenges facing the organisation. The majority of fraud is committed by the lodgement of fraudulent claims and this poses the biggest financial threat for the Fund. The Fund has in the past established a trend involving attorneys, doctors and touts. Touts target the destitute, they sell their claims to attorneys, assisted by medical practitioners, and the more claims sold the more money is made. Specific trends have been identified and the Fund now focuses its efforts on these to curb fraudulent activities.
The growing trend on fraudulent activities relating to lodgement of claims relates to loss of support/earnings claims for foreign accident victims. Fraudulent customary marriage certificates and employer certificates are pro-duced for RSA single mothers to fraudulently lodge claims for loss of support/earnings.
Mandate changes (conversion of direct claims to repre-sented claims) are seen as a threat to the RAF’s effort of increasing direct claiming and are detrimental to the RAF’s reputation. Fraudulent activities occur when mandate changes from direct claimant to attorney or from one attorney to another attorney. These types of fraudulent activities are at times committed with the collusion of the Fund’s staff with third parties, i.e. attorneys, doctors, assessors etc.
Information communication technology
The contribution made by the ICT department in the current position of the business is valuable and noticeable. However, the role of the department is comparatively strategically lower than in similar organisations locally and globally (e.g. SARS, UIF, Home Affairs, etc.). The information systems of the Fund that support the core business were developed more than 15 years ago. They are inadequate, fragmented and involve a lot of manual intervention. There is no capability for a single view of information.
Improvement is required in the following areas: • IT strategic alignment with business;• IT governance; and • IT operations.
PART A
34 Road Accident Fund | Strategic Plan 2015 – 2020
6.6 SWOT analysis and the PESTELG
The process towards developing the strategy was also informed by the Fund’s statutory form of an entity (schedule 3A: National Pub-lic Entity). The Fund conducted a PESTELG and SWOT analysis to develop its Five-year Strategic Plan:
6.6.1 Political, Economic, Social, Technology, Environment, Legal, Geographic/ Regional (PESTELG)
POLITICAL
• Comprehensive Social Security • Changes in Leadership • National Development Plan • Support in respect of RABS and Legislative Changes • Changes in the RAF Act/Mandate
ECONOMIC • Fuel Price Variation
SOCIAL
• Substance Abuse • Poverty • Unemployment • Corporate Social Responsibility • Fraud and Corruption • Social Mobility and an Increase in Number of Younger
Drivers
TECHNOLOGY
• Changes in Modes of Transport • Customer Sophistication • Automation of Claims Processing Systems • Expanding Network Coverage • Segmentation of Customers
ENVIRONMENTAL• Green Economy• Accessibility to RAF Services • Climate Changes
LEGAL• Legislative Compliance• Constitutional Court Challenges
REGIONAL/GEOGRAPHIC• Foreign Claims • Foreign Exchange• UN Social Security
3535Part A | Strategic Overview
• Exclusive legislative mandate• Guaranteed source of revenue• Existing infrastructure• Unique service offering• Corporate governance• Good relationship with Shareholder• Sound and skilled leadership • Recognisable brand• Institutional memory• Improved delivery and business processes
• Strengthen the brand and reputation• Modernisation of the organisation (business process
re-engineering and automation)• Readiness to implement the RABS • Improve post-crash care• Expand the footprint• Improve IT governance (operations) and better
alignment between IT and business
• Not effectively applying the RAF Act• Operational inefficiencies• Perceived poor service delivery• Inadequate records management• Lengthy claims processing turnaround times• Lack of integrated systems• Adversarial relationship with strategic partners• Inefficient implementation of retention strategy• Inadequate change management • Operating in silos
• Fraud & corruption• Adverse judgments• Financial sustainability• Organisational change management• Litigious environment• Stakeholder pressure• Economic instability• Readiness to take on RABS• Negative media coverage• Implications of sister entities (system /activities/
actions• Uncertainties of labour force due to transition to
RABS
STRENGTHS
OPPORTUNITIES
WEAKNESSSES
THREATS
6.6.2 Strengths, Weaknesses, Opportunities, Threats (SWOT)
PART A
36 Road Accident Fund | Strategic Plan 2015 – 2020
6.7 Continuing Risks facing the RAF
The Fund’s Strategic Plan comprises seven strategic risks that have been identified by the Board which are regarded as those risks that will have a negative and positive impact on the achievement of the Fund’s strategic goals, objectives and per-formance targets for the 2015-2020 financial year. These stra-tegic risks consider both risks to the strategy, which are threats that could prevent its achievement; and risks of the strategy, which are risks that might be brought by the strategy itself. Furthermore, the strategic risks are informed by the external and internal operating environment, regulatory framework and economic climate.
6.7.1 Review of the Strategic Risks
i. R1 - Fraud and Corruption
Fraud and Corruption Risk impacts on five strategic objectives of the organisation, namely (i) Efficient claims processing, (ii) Effective financial management, (iii) Optimised ICT services, (iv) Improved people man-agement and (v) Sound governance practices.
The Fund operates in an environment that is targeted by fraudsters, both internally and externally, through collusion, conflict of interest, non-compliance with policies and procedures, theft of information and fictitious accident reports.
The Fund has to continuously deal with professional syndicates and individual fraudsters. Considering the transformational state of the organisation, there is a higher propensity for fraud and corruption. To reduce the Fund’s exposure to fraud and corruption, business is in the process of capacitating the Forensics Unit with IT Forensics Specialists to assist in pro-actively detecting and preventing the latest fraud trends, e.g.
cyber fraud and prediction of criminal dependencies. The ICT Security Strategy that is being rolled out is considered as key in mitigating cyber fraud.
Other key initiatives that are in the process of im-plementation include the data analytics in order to develop mitigation measures that will result in im-provement of processes, as well as identification and assessment of vulnerabilities and interdependencies across the business. A comprehensive Fraud Strate-gy, which encompasses fraud prevention, detection, investigation and reporting is being revised and will be implemented.
ii. R2 – Financial Management/Health
Financial Management Risk impacts on two strategic objectives, namely: (i) Efficient claims processing; and (ii) Effective financial management.
The Fund is dependent on the fuel levy income in order to pay claims; however, the determination of the fuel levy has little regard for the main drivers of the Fund’s claims expenditure. The prevailing disconnect between the fuel levy awarded by Government and the Fund’s operational cash requirements is the prima-ry cause of the poor liquidity that is being experienced by the Fund from time to time. Furthermore, due to the current national economic climate, there is a lower than expected petrol consumption. In addition, the increases in organisational performance and produc-tivity have resulted in increased liquidity concerns for the RAF.
Due to its unsustainable financial model, the Fund has been running at a substantial deficit for 33 years. Consequently, a number of outstanding (open and un-
3737Part A | Strategic Overview
paid) claims have accumulated over time, representing a liability to the Fund. The provision for unpaid claims grows annually due to the expected growth in the cost of settling these claims and interest factors.
Since the provision for future claims exceeds the Fund’s asset base, the Fund remains technically insolvent and this results in the Fund using its cash reserves to cover the shortfall.
The Fund is implementing some mitigation measures to reduce the impact of the risk and these include (a) Requesting additional funds from Government (i.e. National Treasury and the Department of Transport) and propose sufficient funds via the RRM; (b) Implementing stringent cash flow management practices; (c) Imple-menting cost containment measures; (d) Implementing the Supply Chain Management (SCM) Turnaround Strat-egy; and (e) Replacing the current system with a more sustainable RABS.
iii. R3 - ICT
ICT Risk impacts on three strategic objectives, namely: (i) Efficient claims processing; (ii) Accessible services; and (iii) Optimised ICT services.
The Fund is wholly dependent on ICT functions to enable the automation of business processes, ensuring data integrity and protection and ensuring maturity of IT governance in the organisation.
ICT systems are also used to manage and protect the massive amount of claims transactions and data. Other key initiatives such as the Direct Claims Strategy, Hospi-tal Service Centres (HSCs) and the expansion of regional offices depend on ICT to function optimally and to gain competitive advantage. Automation of processes and the ever-evolving nature of IT pose new risks to the Fund that requires pro-active identification and management.
To manage this risk, a number of initiatives are in the process of implementation and they mainly include: (a) Implementation of the Five-year ICT plan which aims to achieve the following five core outcomes: (1) Improve claims processing and efficiency through ICT; (2) Optimise content and information management; (3) Strengthen governance and risk management; (4) Stabilise and ensure adequacy of ICT infrastructure; and (5) Prepare and ready ICT for RABS implementation.
iv. R4 – Stakeholder Pressure
The Stakeholder Pressure Risk impacts on five strategic objectives, namely: (i) Efficient claims processing; (ii) Ac-cessible services; (iii) Effective financial management; (iv) Enabling legislative environment; and (v) Sound govern-ance practices. The Fund has a vast and broad spectrum of stakeholders and therefore needs to understand their expectations, needs and perceptions in order to deliver on its mandate. The Fund operates in a highly litigious and contested terrain, thus making it susceptible to pressure from various stakeholders. This poses an inherent risk around understanding and managing the various com-plex and ever-changing needs, expectations and interests of the stakeholders.
A number of mitigation strategies are being implemented to mitigate risks including Stakeholder Policy, map and matrix as well as a pro-active Media Strategy and key stakeholder engagement strategies.
v. R5 – People Management
The People Management Risk impacts on two strategic objectives, namely: (i) Efficient claims processing; and (ii) Improved people management.
The Fund is a labour-intensive service organisation that relies on people to effectively deliver on its mandate. Therefore, the attraction and retention of leadership and a
PART A
38 Road Accident Fund | Strategic Plan 2015 – 2020
workforce that is appropriately skilled, motivated, per-formance-driven, customer-centric and committed to providing excellent service is crucial. The Fund invests in growing and developing employees and ensuring optimal staff capacity. The Fund is implementing vari-ous mitigation strategies to manage this risk through the Human Capital policies and processes, and other initiatives which include, among others: Automation of performance management and improved recruit-ment processes, implementation of change man-agement strategies, implementation of absenteeism framework, succession planning, talent management and employee wellness services.
vi. R6 – Service Delivery
Service Delivery Risk impacts on all strategic objectives as it addresses the core and the engine of the Fund to effectively deliver on its mandate. The Fund has a large number of outstanding claims, mainly because of underfunding over the past couple of years, and the complexities in the current claims process as a result of the current Act. However, due to insufficient funding, the business is unable to process and pay claims at the rate it receives them. The Fund is in the process of establishing itself as an organisation that is more customer-centric, effective and efficient.
This ensures that customers receive high-quality service, claims are processed quickly and accurately, legal and administrative costs are contained and fraud is eliminated.
The Fund is potentially faced with key challenges in trying to deliver on its mandate and these include, but are not limited to: (i) The number of direct claims becoming represented; (ii) Settlement turnaround times on all heads of damages; (iii) Increasing claims backlog; (iv) Increase in legal costs; and (v) Pillar 5 challenges (i.e. medical Undertakings).
A number of mitigation strategies are being implemented to mitigate risks, including: (a) Analysis of key drivers for busi-ness targets; (b) Optimisation, standardisation and re-engi-neering the claims value chain; (c) Implementation of the Integrated Claims Management System; (d) Implementation of the rehabilitation processes; (e) Standardising the whole claims process value chain; and (f ) Monitoring of staff, service providers, RAF panel attorneys, and implementation of Quality Assurance processes.
vii. R7 – Regulatory Framework
The Regulatory Framework Risk impacts on four of RAF’s strategic objectives, namely: (i) Efficient claims processing; (ii) Effective financial management; (iii) Enabling legislative environment; and (iv) Sound governance practices.
The current fault-based scheme is complex and subjective in that it often requires time-consuming and expensive legal procedures to establish fault and the quantum of damages suffered. The Fund is therefore susceptible to a number of legal challenges against the RAF Act, adverse Court judgments against the Fund as a result of non-adherence to the provi-sions of the Act and a number of reported incidents of viola-tions due to non-compliance with regulations. There is also an inherent risk of limited interpretation and application of the RAF Act and its sub-ordinate prescripts in improving business efficiency and the financial position of the Fund. While the de-velopment of RABS is aligned with the DoT’s goals, it may take a few years before this new legislation is implemented and there is a possibility of a myriad of challenges against RABS. Non-compliance with policies and procedures also seem to be a challenge. However, the combined assurance model will be implemented, amongst other things, to audit the adequacy and effectiveness of controls and to monitor compliance to the policies.
Business is implementing more initiatives which include mon-itoring of the RAF Act and RABS implementation and ensuring organisational readiness for its implementation. Engagement plans with various fraternities will be implemented.
3939Part A | Strategic Overview
7. The Fund’s Strategic Journey
• Client value and a higher proportion of revenue to claimants;
• An improved claims handling and processing;
• Superior levels of customer service;
• Reductions in fraudulent claims.
• Centralise processing of claims through the creation of Benefits Administration Unit (BAU);
• Originate claims through a distributed network of customer interface channels – Customer Services Network (CSN);
• Implementation of a claims management system – Fineos.
• •
• Decentralisation of claims processing;
• Re-alignment of the organisational structure;
• Semi-autonomous regional offices;
• Improved access to services;• Increased compliance and
governance;• Ensuring financial
sustainability of the Fund
FY 2005 - FY 2009 Project Phetogo
focused on:
FY 2009 - FY 2012 Centralisation and Automation (NOM):
FY 2012 - FY 2015Productivity
and Efficiency:
7.1 Evolution of the Fund and the Fund’s Strategy
7.1.1 Phetogo – 2005 – 2009In 2005, the Fund lauched a programme named Phetogo. This was a business change strategy aimed at streamlin-ing the Fund’s activities to ensure more client value and a higher proportion of revenue to claimants; improved claims handling and processing; superior levels of cus-tomer service; and reductions in fraudulent claims.
To achieve this, the Fund required a new business model to deliver: • Financial stability;• An expanded geographic footprint and improved
reach throughout South Africa;• Implementation of the Road Accident Fund
Amendment Act;• A facilitated transition from fault-based to non-fault-
based legislation; and• A way to reduce and clear the claims backlog, as well
as to stop it reappearing.
7.1.2 Centralisation and Automation (NOM): 2009 – 2012
In 2009, the RAF adopted a strategy to centralise the processing of claims at head office through an automated system. The system that was chosen by the Fund for automation was Fineos. The main objectives of the strategy were to:• Centralise the processing of claims through the creation of a
Benefits Administration Unit (BAU);• Originate claims through a distributed network of customer
interface channels – Customer Services Network (CSN); and• Implementation of a claims management system – Fineos.
Some of the objectives set out in the strategy for the RAF during the period were not achieved because of various challenges with the chosen system within the current legislative enviroment. The RAF then decided to discontinue some aspects of the strategy which were not being achieved and take a new direction for the organisation.
PART A
40 Road Accident Fund | Strategic Plan 2015 – 2020
7.1.3 Productivity and Efficiency: 2012 – 2015
In 2012, the Fund embarked on a strategy to improve efficien-cies and productivity within the Fund. The main pillars of the strategy involved;• Decentralisation of claims processing;• Re-alignment of the organisational structures;• Semi-autonomous regional offices;• Improved access to services;• Increased compliance and governance; and • Ensuring financial sustainability of the Fund.
7.2 Strategic Transformation of the FundFollowing the review and execution of the strategy over the past three years, the Fund has seen a drastic transformation in its opera-tions. The table below depicts some highlights of the results achieved over the past three (3) years.
2011/2012 2012/2013 2013/2014
Strategic Plan ValidityNot aligned to strategy and erroneous
Aligned to strategy and SMART targets
Strategy executed and ma-tured
APP Targets Met 54% 83% 83%
Fuel Levy R16.9 bn R17.8 bn R20.2 bn
Staff count 1,844 1,881 2,288
Open Claims 264 579 279 212 232 285
Settled Claims 170 043 162 130 240 783
Claims Payment R12.5 bn R15 bn R22 bn
Legal Costs as % of Claims 29% 27% 21%
Reopened Claims 41 480 16 648 14 899
National footprint – Offices5 6 6 + 4 Customer Service Cen-
tres (CSCs)
National Footprint - HSC’s 52 76 83
Direct Claims Originated 15 % 23% 27%
The Fund achieved better performance during this period as evident in the 83% achievement of targets against pre-deter-mined objectives in the 2012/2013 and 2013/2014 financial years. This led to the Fund consolidating its position as an efficient Government institution. To this effect, the Fund is reviewing its current strategy to identify areas of improvement and areas where the Fund can add more value to its customers.
4141Part A | Strategic Overview
Strategy Team Executive Board
ConvertTake current 3yr plan and
convert into NT Framework and ensure alignment with
AG requirements
Edit and Format
Confirm result in Strategic Session
Final Sign-off
ExtendConsult with Divisional Managers and extend
programmes from 3 to 5 years
Consult and realign
Confirm results in Strategic Session
Final Sign-off
AddReview of external
documents + facilitate Strategic Session
and write up
Review, summarise,
align, facilitate & write up
Work with Board input to add further content to the Plan
Provide high level guidance and direction
Final sign-off
2011/2012 2012/2013 2013/2014
RAF on the Road N/R 13 155 20 490
Writs 11 656 7 844 5 595
Call Centre• Agents• Number of Calls• % Abandoned calls
• 5• N/A• N/A
• 16• 215 624• 33.3%
• 20• 254 338• 3.9%
Fraud Arrests 502 290 478
Audit Opinions Unqualified Clean Audit Award Clean Audit
Internal Audit Findings N/A 147 338
Risk Maturity (1 - 5) N/A 3/5 4/5
Compliance Unit N/A Planned Established
Strategy and Reporting N/A Planned Established
Verification and Validation N/A Planned Established
Quality Assurance N/A Planned Established
Complaints Management N/A Planned Established
7.3 The Strategic Planning ProcessThe process followed in delivering the Fund’s Strategic Plan is consistent with the guidelines that were issued by National Treasury with regard to the development of Strategic Plans and Annual Performance Plans. Accordingly, a three-step process was adopted in developing this strategic plan:
PART B
44 Road Accident Fund | Strategic Plan 2015 – 2020
8. Part B: Strategic Objectives of the Fund
8.1 The Fund’s Five-year Priorities to Achieve its Seven Outcomes
Over the next five years, the Fund’s strategy will be anchored on seven (7) main pillars. Each of these pillars aims to deal with specific challenges that the Fund faces. In addition, these will form the basis on which subsequent performance plans and operational plans will be developed.
No. Pillars Key Institutional Challenges to be addressed
1. Efficient claims processing Service delivery.
2. Accessible services Accessibility of service offerings to all RAF claimants to increase the direct claiming base.
3. Effective financial management Limited funding and ability to pay claims.
4. Optimal ICT functionality Old ICT infrastructure and information technology not addressing service delivery expec-
tations required by RAF claimants.
5. Improved people management Skills development and advancement of Government priorities to advance previously
disempowered communities.
6. Administrative dispensation aligned to the RABS Bill
Alignment of the Fund to the envisaged Road Accident Benefit Scheme (RABS).
7. Assured control environment Improved governance and compliance.
8.1.1 Efficient Claims Processing
8.1.1.1. Outcome Description
During the 2015 –2020 strategic plan-ning period, the Fund will complete the implementation of measures to achieve operational efficiency and a seamless and appropriate customer experience. Such operational efficiencies will make the RAF’s systems and processes more effective and efficient. In addition, the Fund’s national footprint will be expanded and customer interaction points optimised to ensure that the total experience for the customer is of a consistently high standard.
Strategic Goal 1 Efficient claims processing
Strategic Goal Description
To optimise the processing of claims in the early stage of a claim and minimise unnecessary further complica-tions with a claim
Outcome Indicators
• Effectively manage number of claims• Reduce the average age of open claims• Increase number of claims verified by objecting to or
accepting within 60 days• Increase percentage of direct claims originated• Increased percentage of direct claims settled• Reduction in legal costs as a percentage of total
claims expenditure• Implement Post-Crash Care Strategy (Pillar 6)
4545Part B | Strategic Objectives of the Fund
8.1.2 Accessible Services
8.1.3 Effective Financial Management (Health)
8.1.2.1. Outcome Description
To ensure all strategic objectives of the Fund are achieved, business support functions should be effective in enabling the Fund to achieve its objectives.
8.1.3.1. Outcome Description
The Fund will focus on financial sustainability and may seek and explore various options to capitalise the organisation. The Fund will ac-tively engage with National Treasury and the DoT to determine fuel levy allocation increases annually. Furthermore, the Fund will also com-mence with the process of developing strat-egies for reducing legal and operating costs through internal cost management initiatives.
Strategic Goal 2 Accessible Services
Strategic Goal Description
Increase accessibility to RAF services through various channels to improve service delivery by increasing the reach of the Fund’s service offer-ings to all motor vehicle accident victims
Outcome Indicators
• Increase accessibility to RAF services • Increase the number of claimants engaged at
RAF events (RAF on the Road) and other events• Improved Call Centre responsiveness• Improved customer satisfaction
Strategic Goal 3 Effective Financial Management/Health
Strategic Goal Description
Increasing revenue, reducing costs and imple-menting other means to re-capitalise the RAF
Outcome Indicators
• Effective cash flow management• Provision for claims incurred assessed quarterly• Improve procurement outcomes• Increase percentage of B-BBEE-rated suppliers• Implement Enterprise Supplier Development
(ESD) initiatives.
PART B
46 Road Accident Fund | Strategic Plan 2015 – 2020
8.1.4 Optimal ICT Funtionality
8.1.5 Improve People Management
8.1.4.1. Outcome Description
8.1.5.1. Outcome Description
The Fund will capacitate the organisation and promote accountability and a perfor-mance-driven ethos. The intention is to improve the efficiency and transparency of its internal processes, particularly Human Capital and Procurement processes. This will be done by improving internal workflows and with the appropriate allocation of resources, the Fund can improve its productivity by eliminating in-ternal delays due to inefficiencies in processes, or mismatches in capacity.
Strategic Goal 4 Optimal ICT Services
Strategic Goal Description
To create a solid foundation through developing and deploying IT solutions to increase the efficiency and effectiveness of our systems and processes as well as En-terprise Risk Management capabilities
Outcome Indicators
• Ensure optimal ICT ser-vice availability
• Implement the Five-year ICT strategy (e-Enable-ment Strategy)
Strategic Goal 5 Improve People Management
Strategic Goal Description
Build an institution that is performance-driven and values the customer, and improve the aware-ness of the RAF brand
Outcome Indicators
• Optimise organisational performance • Improve workforce skills and placement for
current and future requirements• Maintain the RAF’s contribution towards Gov-
ernment’s social and economic transformation agenda
• Manage absenteeism
The Fund is wholly dependent on ICT functions to enable the automation of business pro-cesses, ensuring data integrity and protection and ensuring maturity of IT governance in the organisation. ICT aims to evolve from simply being a business enabler to being an essential component in implementing the RAF business strategy and executing on its mandate.
ICT thus plays an integral role in ensuring the achievement of the RAF strategy. A number of initia-tives that the RAF is planning to undertake in the next five years are dependent on transforma-
tion of the ICT environment to function optimally and gain competitive advantage.
The outcomes that will be realised with the successful implementation of the Five-year ICT Strategy mainly include: (a) Establishment of the Enterprise Architecture for the RAF; (b) Stabilisation and availability of the ICT systems; (c) Rolling-out of ICT security management services; (d) Alignment of the ICT business strategy to the current and future organisation-al strategy; and (e) Capacitation of the ICT function with the required skills.
4747Part B | Strategic Objectives of the Fund
8.1.6 Administrative Dispensation Aligned to the RABS Bill
8.1.7 Assured Control Environment
8.1.6.1. Outcome Description
Transition the RAF to the RABS by developing the RABS business architecture of the future organisa-tion, as well as the RAF Funding Model.
8.1.7.1. Outcome Description
The RAF Board of Directors has formally adopted the King III Report on Corporate Governance. A part of its functions, Manage-ment needs to develop effective ways to better control the busi-ness and to help ensure that RAF objectives related to operations, reporting, and compliance are achieved. Control environment factors include the integrity, ethical values and competence of the RAF’s people; Management’s philosophy and operating style; the way Management assigns authority and responsibility, and or-ganises and develops its people; and the attention and direction provided by the Board of Directors.
The Fund is highly dependent on accurate, complete and timely motor vehicle crash data to fulfill its mission of rehabilitating persons injured, compensate for injuries or death in a timely, caring and sustainable manner; and to support the safe use of our roads. A comprehensive national crash database is in support of the current and future RAF business model, as it will ensure timely origination of claims, improve service delivery (i.e. reducing claims processing turnaround times) and minimise the levels of fraud.
Strategic Goal 6 Administrative Dispensation Aligned to the RABS Bill
Strategic Goal Description
Transitioning RAF to RABS and implementation of programmes to ensure successful implemen-tation of the proposed RABS business model
Outcome Indicators
Development and approval of the RABS fund-ing model as well as the development and im-plementation of RABS enterprise architecture
Strategic Goal 7 Assured Control Environment
Strategic Goal Description
Ensure compliance to stan-dards and improve governance and accountability
Outcome Indicators
• Raise ethical standards• Increase % of fraud detected
before undue payments are made
• Contribute to road safety by creating a database in a re-port that will inform preven-tative measures
PART B
48 Road Accident Fund | Strategic Plan 2015 – 2020
8.2 Measuring the Fund’s Delivery
8.2.1 Alignment with Government and Best PracticeThe Fund needs to align its performance management approach to that of the Government’s planning, performance monitoring and evaluation approach, with the emphasis on delivery and results-based management.
TableMeasurement approach
Pool of resources required to meet desired outcomes
• How much do we need to invest in resources to achieve the desired outcomes.
• Determine optimal allocation of inputs given desired outputs
• Reallocate resources if necessary.
Collection of functions (actions, jobs, tasks) that consume resources required to produce outputs
• What activities is the RAF going to do to achieve the outputs.
• Measures delivery of key activities.
Direct products and services generated through processes or activities
• Which priority outputs would the RAF measure to achieve the desired outcomes.
• Measure key outputs that will show if the RAF is making progress in delivering the outcomes.
Effects, benefits or consequences that occur (either in the short, intermediate, or long term) due to the produced outputs
• What are the key outcomes that the Fund needs to achieve its organisational goals.
HOW WE DO
INPUTS
WHAT WE DO
ACTIVITIES
WHAT WE PRODUCE
OUTPUTS
WHAT WE WISH TO ACHIEVE
OUTCOMES
4949Part B | Strategic Objectives of the Fund
In addition, the RAF has researched the measurement and reporting approaches of various social security cluster public entities. Lessons learned were also used to inform the planning and performance management approach. It should, how-ever, be noted that moving towards an outcomes-based approach is no easy task. Numerous challenges are encountered, for example:
Finding accurate measures of performance
Outcome measures are technically more difficult to measure. They are complex and involve the interaction of many factors, planned and unplanned; hence, the use of a combination of outputs and outcomes.
Establishing and maintaining systems of data collection
There needs to be a process by which data is verified and validated to ensure quality. However due to the claims system gaps, mainly caused by the RAF’s old and obsolete claims database platform, setting up and maintaining these systems can be complex and requires some form of manu-al intervention.
Setting and using performance targets
Performance targets help clarify per-formance expectations for a given time period. There are problems with setting targets too high or too low. Setting targets too low means that the Fund is not challenged to improve perfor-mance. Setting them too high, while it can serve as a motivation, also creates unrealistic expectations and situations where efforts put in place by the Fund can fail. It takes time to get the right levels and to get to the comparative data to realise that targets are set too high or too low. There is also an issue about a reasonable number of targets. Too many targets create information overload and make it difficult to select. Too few targets create distortion effects again. Achieving the right balance takes time and is an on-going focus.
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ims
with
in 6
0 da
ys
(incr
ease
by
10%
ann
ually
)
60%
of c
laim
s ve
rified
are
ob
ject
ed to
or a
ccep
ted
with
in 6
0 da
ys
Incr
ease
to 7
0%
of c
laim
s ve
rified
ar
e ob
ject
ed to
or
acce
pted
with
in 6
0 da
ys
Incr
ease
to 8
0%
Incr
ease
to 9
0%In
crea
se to
100
%
Mai
ntai
n 10
0%
leve
ls o
f 60
days
ve
rifica
tion
% in
crea
se in
dire
ct c
laim
s or
ig-
inat
edEx
pect
ed p
erfo
rman
ce
for 2
014/
15 –
28%
to
16,7
68
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
8.3
The
Fun
d’s
Out
com
e M
easu
res
and
Fiv
e-ye
ar T
arge
ts
Obj
ecti
ve 1
: Ini
tiat
ives
alig
ned
to t
he s
trat
egic
out
com
e of
effi
cien
t pr
oces
sing
of
clai
ms
51
Roa
d A
ccid
ent
Fund
| St
rate
gic
Pla
n 20
15 –
20
20P
art
B |
Str
ateg
ic O
bjec
tive
s of
the
Fun
d
Str
ateg
ic
Out
com
eP
erfo
rman
ce In
dica
tor
Bas
elin
eTa
rget
s/M
ilest
ones
20
15\1
62
016
/17
20
17/1
82
018
/19
20
19/2
0
Incr
ease
d pe
rcen
tage
of d
irect
cl
aim
s se
ttle
d as
a %
of t
otal
pe
rson
al c
laim
s se
ttle
d
Estim
ated
per
form
ance
fo
r 201
4/15
FY
20%
to
10,8
97
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Incr
ease
by
2.5%
fr
om th
e pr
evio
us
year
’s re
port
ed
resu
lts
Redu
ctio
n in
lega
l cos
ts (a
ttor
ney
and
advo
cate
fees
, exc
ludi
ng
expe
rt a
nd a
sses
sor p
aym
ents
) by
2%
ann
ually
Expe
cted
per
form
ance
16
%Re
duce
by
2% fr
om
the
set b
asel
ine
Redu
ce b
y 2%
from
th
e pr
evio
us y
ear’s
re
port
ed re
sults
Redu
ce b
y 2%
from
th
e pr
evio
us y
ear’s
re
port
ed re
sults
Redu
ce b
y 2%
from
th
e pr
evio
us y
ear’s
re
port
ed re
sults
Redu
ce b
y 2%
from
th
e pr
evio
us y
ear’s
re
port
ed re
sults
Impl
emen
t Pos
t-cr
ash
Care
St
rate
gy (P
illar
6)
App
rove
d Pi
llar 6
Str
at-
egy
Paym
ent o
f car
egiv
-er
s w
ithin
30
days
.Tr
eatm
ent p
lans
in
trod
uced
for a
ll ne
w U
nder
taki
ngs
Impl
emen
t au-
tom
ated
cla
ims
proc
essi
ng
Ass
ess
reha
bilit
a-tio
n ou
tcom
esRe
port
on
reha
bili-
tatio
n ou
tcom
es
PA
RT
B
52
Obj
ecti
ve 2
: Ini
tiat
ives
alig
ned
to t
he s
trat
egic
out
com
e of
pro
vidi
ng a
cces
sibl
e se
rvic
es
Str
ateg
ic
Out
com
eP
erfo
rman
ce In
dica
tor
Bas
elin
eTa
rget
s/M
ilest
ones
20
15\1
62
016
/17
20
17/1
82
018
/19
20
19/2
0
Acce
ssib
le
Serv
ices
Incr
ease
d ac
cess
ibili
ty to
RA
F se
rvic
es
Five
Cus
tom
er S
ervi
ce
Cent
res
(CSC
s) a
nd 8
6 H
ospi
tal S
ervi
ce C
entr
es
(HSC
s ) (
as a
t 31
Dec
em-
ber 2
014)
Chan
nel R
evie
w
Repo
rt c
ompl
eted
by
31
Dec
embe
r 20
15
Ope
n tw
o (2
) add
i-tio
nal a
cces
s po
ints
Ope
n on
e (1
) add
i-tio
nal a
cces
s po
int
Ope
n on
e (1
) add
i-tio
nal a
cces
s po
int
Ope
n on
e (1
) add
i-tio
nal a
cces
s po
int
Incr
ease
the
num
ber o
f cla
iman
ts
enga
ged
at R
AF
even
ts, i
.e. ‘R
AF
on th
e Ro
ad’ &
oth
er e
vent
s
25,0
00 c
laim
ants
en-
gage
d at
RA
F ev
ents
Incr
ease
cla
iman
ts
enga
ged
by 1
5% to
28
,750
Incr
ease
cla
iman
ts
enga
ged
by 1
5% to
33
,100
Incr
ease
cla
iman
ts
enga
ged
by 1
5% to
38
,000
15In
crea
se c
laim
-an
ts e
ngag
ed b
y 15
% to
43,
700
Incr
ease
cla
iman
ts
enga
ged
by 1
5% to
50
,255
Impr
oved
Cal
l Cen
tre
resp
onsi
ve-
ness
5% a
band
oned
cal
ls4%
aba
ndon
ed c
alls
3.5%
aba
ndon
ed
calls
3% a
band
oned
cal
ls2.
5% a
band
oned
ca
lls2%
aba
ndon
ed c
alls
Impr
ove
cust
omer
sat
isfa
ctio
n D
evel
op a
nd m
easu
re
base
line
Cond
uct a
cus
-to
mer
sat
isfa
ctio
n su
rvey
to e
stab
lish
base
line
and
mea
-su
re
10%
impr
ove-
men
t fro
m th
e se
t ba
selin
e ba
sed
on m
easu
re s
et in
15
/16
FY
10%
cum
ulat
ive
impr
ovem
ent f
rom
th
e 16
/17
FY
10%
cum
ulat
ive
impr
ovem
ent f
rom
th
e 17
/18
FY
10%
cum
ulat
ive
impr
ovem
ent f
rom
th
e 18
/19
FY
53
Roa
d A
ccid
ent
Fund
| St
rate
gic
Pla
n 20
15 –
20
20P
art
B |
Str
ateg
ic O
bjec
tive
s of
the
Fun
d
Obj
ecti
ve 3
: Ini
tiat
ives
alig
ned
to t
he s
trat
egic
out
com
e of
eff
ecti
ve fi
nanc
ial m
anag
emen
t
Str
ateg
ic
Out
com
eP
erfo
rman
ce
Indi
cato
rB
asel
ine
Targ
ets/
Mile
ston
es
20
15\1
62
016
/17
20
17/1
82
018
/19
20
19/2
0
Effec
tive
Fina
n-ci
al M
anag
e-m
ent
Effec
tive
cash
flow
man
-ag
emen
t Cu
rren
t act
uaria
l val
ua-
tion
met
hodo
logy
D
evel
op a
nd u
se
actu
aria
l for
ecas
t m
odel
to m
otiv
ate
for s
uffici
ent f
undi
ng
Dev
elop
and
use
ac
tuar
ial f
orec
ast
mod
el to
mot
ivat
e fo
r suffi
cien
t fun
ding
Dev
elop
and
use
ac
tuar
ial f
orec
ast
mod
el to
mot
ivat
e fo
r suffi
cien
t fun
ding
Dev
elop
and
use
ac
tuar
ial f
orec
ast
mod
el to
mot
ivat
e fo
r suffi
cien
t fun
ding
Dev
elop
and
use
ac
tuar
ial f
orec
ast
mod
el to
mot
ivat
e fo
r suffi
cien
t fun
ding
App
rove
d ca
sh m
anag
e-m
ent p
roce
dure
sM
anag
e cr
edito
rs
in a
ccor
danc
e w
ith
appr
oved
cas
h m
an-
agem
ent p
roce
dure
s
Man
age
cred
itors
in
acc
orda
nce
with
ca
sh m
anag
emen
t pr
oced
ures
Man
age
cred
itors
in
acc
orda
nce
with
ap
prov
ed c
ash
man
-ag
emen
t pro
cedu
res
Man
age
cred
itors
in
acc
orda
nce
with
ap
prov
ed c
ash
man
-ag
emen
t pro
cedu
res
Man
age
cred
itors
in
acc
orda
nce
with
ap
prov
ed c
ash
man
-ag
emen
t pro
cedu
res
Prov
isio
n fo
r cla
ims
in-
curr
ed a
sses
sed
quar
terly
Prov
isio
n fo
r cla
ims
in-
curr
ed a
sses
sed
quar
terly
an
d an
ann
ual a
sses
s-m
ent c
ondu
cted
by
an
inde
pend
ent a
ctua
ry
Inte
rnal
mod
el fo
r cl
aim
s in
curr
ed a
s-se
ssm
ent e
stab
lishe
d an
d an
ann
ual a
s-se
ssm
ent c
ondu
cted
Prov
isio
n fo
r cla
ims
incu
rred
ass
esse
d qu
arte
rly a
nd a
n an
nual
ass
essm
ent
cond
ucte
d by
an
inde
pend
ent a
ctua
ry
Prov
isio
n fo
r cla
ims
incu
rred
ass
esse
d qu
arte
rly a
nd a
n an
nual
ass
essm
ent
cond
ucte
d by
an
inde
pend
ent a
ctua
ry
Prov
isio
n fo
r cla
ims
incu
rred
ass
esse
d qu
arte
rly a
nd a
n an
nual
ass
essm
ent
cond
ucte
d by
an
inde
pend
ent a
ctua
ry
Prov
isio
n fo
r cla
ims
incu
rred
ass
esse
d qu
arte
rly a
nd a
n an
nual
ass
essm
ent
cond
ucte
d by
an
inde
pend
ent a
ctua
ry
Impr
ove
Proc
urem
ent
outc
omes
Sign
ed o
ff Fi
ve-y
ear
Supp
ly C
hain
Man
age-
men
t (SC
M) O
ptim
isat
ion
Stra
tegy
Proc
urem
ent
turn
arou
nd ti
mes
re
duce
d to
120
day
s
Proc
urem
ent
turn
arou
nd ti
mes
re
duce
d to
110
day
s
Proc
urem
ent
turn
arou
nd ti
mes
re
duce
d to
100
day
s
Proc
urem
ent
turn
arou
nd ti
mes
re
duce
d to
90
days
Proc
urem
ent
turn
arou
nd ti
mes
re
duce
d to
80
days
Less
than
10%
of P
ro-
cure
men
t pro
cedu
res
unsu
cces
sful
Les
s th
an 1
0% o
f Pr
ocur
emen
t pro
ce-
dure
s un
succ
essf
ul
Les
s th
an 1
0% o
f Pr
ocur
emen
t pro
ce-
dure
s un
succ
essf
ul
Les
s th
an 1
0% o
f Pr
ocur
emen
t pro
ce-
dure
s un
succ
essf
ul
Les
s th
an 1
0% o
f Pr
ocur
emen
t pro
ce-
dure
s un
succ
essf
ul
Incr
ease
per
cent
age
of
B-BB
EE-r
ated
sup
plie
rs10
0% B
-BBE
E-ra
ted
supp
liers
110%
B-B
BEE-
rate
d su
pplie
rs11
5% B
-BBE
E-ra
ted
supp
liers
120%
B-B
BEE-
rate
d su
pplie
rs12
5% B
-BBE
E-ra
ted
supp
liers
130%
B-B
BEE-
rate
d su
pplie
rs
Impl
emen
t Ent
erpr
ise
Supp
lier D
evel
opm
ent
(ESD
) ini
tiativ
es
Dev
elop
mea
sure
and
ba
selin
e fo
r ESD
. A
ppro
ved
ESD
pla
n0.
1%
allo
cate
d bu
d-ge
t spe
nd o
n ES
D0.
2% a
lloca
ted
bud-
get s
pend
on
ESD
0.3%
allo
cate
d bu
d-ge
t spe
nd o
n ES
D0.
3% a
lloca
ted
bud-
get s
pend
on
ESD
PA
RT
B
54
Obj
ecti
ve 4
: Ini
tiat
ives
alig
ned
to t
he s
trat
egic
out
com
e of
opt
imis
ing
ICT
fun
ctio
nalit
y
Str
ateg
ic
Out
com
eP
erfo
rman
ce
Indi
cato
r B
asel
ine
Targ
ets/
Mile
ston
es
20
15\1
62
016
/17
20
17/1
82
018
/19
20
19/2
0
Opt
imal
ICT
func
tiona
lity
Ensu
re o
ptim
al IC
T se
rvic
e av
aila
bilit
y98
% s
ervi
ce a
vaila
bilit
y on
crit
ical
ser
vice
s98
% s
ervi
ce a
vaila
bil-
ity o
n cr
itica
l ser
vice
s98
% s
ervi
ce a
vaila
bil-
ity o
n cr
itica
l ser
vice
s98
% s
ervi
ce a
vaila
bil-
ity o
n cr
itica
l ser
vice
s98
% s
ervi
ce a
vaila
bil-
ity o
n cr
itica
l ser
vice
s98
% s
ervi
ce a
vaila
bil-
ity o
n cr
itica
l ser
vice
s
Impl
emen
t Fiv
e-ye
ar IC
T St
rate
gy (e
-Ena
blem
ent
Stra
tegy
)
Five
-yea
r IC
T St
rate
gy
appr
oved
Year
One
initi
ativ
es
met
25%
bac
k-sc
anni
ng
of c
laim
con
tent
file
s
Year
Tw
o in
itiat
ives
m
et
Func
tiona
l e-fo
rms
and
repo
sito
ries
in
plac
e by
the
end
of
16/1
7 FY
Year
Thr
ee in
itiat
ives
m
et
100%
roll-
out o
f ECM
re
posi
torie
s
Year
Fou
r ini
tiativ
es
met
Inte
grat
ed C
laim
s M
anag
emen
t Sys
tem
te
sted
Go
live
on IC
MS
by
31 D
ecem
ber 2
019
55
Roa
d A
ccid
ent
Fund
| St
rate
gic
Pla
n 20
15 –
20
20P
art
B |
Str
ateg
ic O
bjec
tive
s of
the
Fun
d
Obj
ecti
ve 5
: Ini
tiat
ives
alig
ned
to t
he s
trat
egic
out
com
e of
impr
ovin
g pe
ople
man
agem
ent
Str
ateg
ic
Out
com
eP
erfo
rman
ce
Indi
cato
r B
asel
ine
Targ
ets/
Mile
ston
es
20
15\1
62
016
/17
20
17/1
82
018
/19
20
19/2
0
Impr
oved
Peo
-pl
e M
anag
e-m
ent
Opt
imis
e or
gani
satio
nal
perf
orm
ance
Qua
rter
ly in
divi
dual
per
-fo
man
ce a
sses
smen
tsIm
plem
ent a
n au
to-
mat
ed p
erfo
rman
ce
man
agem
ent s
yste
m
Impl
emen
t 360
° as
sess
men
t at E
xecu
-tiv
e le
vel
Impl
emen
t 360
° as-
sess
men
t at G
ener
al
Man
ager
s an
d Se
nior
M
anag
emen
t lev
el
Impl
emen
t 360
° as
sess
men
t at M
an-
agem
ent a
nd Te
am
Lead
s le
vel
Impl
emen
t 360
° as-
sess
men
t at a
ll le
vels
Impr
oved
wor
kfor
ce
skill
s an
d pl
acem
ent
for c
urre
nt a
nd fu
ture
re
quire
men
ts
Dev
elop
mea
sure
and
ba
selin
eSk
ills
Ass
essm
ent
Repo
rtRA
BS S
kills
Req
uire
-m
ent R
epor
t and
Tr
ansf
orm
atio
n St
rate
gy
Impl
emen
t and
trac
k co
mpl
ianc
e to
the
Skill
s D
evel
opm
ent
Plan
.
Impl
emen
t RA
BS
Chan
ge M
anag
e-m
ent P
lan.
Trac
k co
mpl
ianc
e to
th
e Sk
ills
Dev
elop
-m
ent P
lan.
Impl
emen
t RA
BS
Chan
ge M
anag
e-m
ent P
lan
Redo
ski
lls a
sses
se-
men
t
Mai
ntai
n RA
F’s
cont
ri-bu
tion
tow
ards
Gov
-er
nmen
t’s s
ocia
l and
ec
onom
ic a
gend
a
Gen
der e
quity
with
10%
va
rianc
e
Mai
ntai
n ge
nder
equ
ity
with
in 1
0% v
arie
nce
Mai
ntai
n ge
nder
eq
uity
with
in 1
0%
varia
nce
Mai
ntai
n ge
nder
eq
uity
with
in 1
0%
varia
nce
Mai
ntai
n ge
nder
eq
uity
with
in 1
0%
varia
nce
Mai
ntai
n ge
nder
eq
uity
with
in 1
0%
varia
nce
Mai
ntai
n ge
nder
eq
uity
with
in 1
0%
varia
nce
Man
age
abse
ntee
ism
23
0 lo
st m
an-d
ays
as a
t 31
Dec
embe
r 201
4Lo
st m
an-d
ays
redu
ced
by 1
0% to
2.
07 d
ays
Lost
man
-day
s re
duce
d by
10%
to
2.07
day
s
Lost
man
-day
s re
duce
d by
10%
to
2.07
day
s
Lost
man
-day
s- re
-du
ced
by 1
0% to
2.0
7 da
ys
Lost
man
-day
s re
duce
d by
10%
to
2.07
day
s
Ope
ratio
nalis
e ab
-se
ntee
ism
man
age-
men
t too
l
PA
RT
B
56
Obj
ecti
ve 7
: Ini
tiat
ives
alig
ned
to t
he s
trat
egic
out
com
e of
an
assu
red
cont
rol e
nvir
onm
ent
Str
ateg
ic
Out
com
eP
erfo
rman
ce
Indi
cato
rB
asel
ine
Targ
ets/
Mile
ston
es
20
15\1
62
016
/17
20
17/1
82
018
/19
20
19/2
0
Adm
inis
trat
ive
disp
ensa
tion
alig
ned
to th
e RA
BS B
ill
Tran
sitio
ning
RA
F to
RA
BSA
ppro
ved
RABS
bus
ines
s ca
se
Dev
elop
and
ap-
prov
e RA
BS b
usin
ess
arch
itecu
ture
Impl
emen
t asp
ects
of
the
appr
oved
RA
BS
busi
ness
arc
hite
ctur
e
Mon
itor a
nd tr
ack
im-
plem
enta
tion
of R
ABS
bu
sine
ss a
rchi
tect
ure
Mon
itor a
nd tr
ack
im-
plem
enta
tion
of R
ABS
bu
sine
ss a
rchi
tect
ure
Mon
itor a
nd tr
ack
im-
plem
enta
tion
of R
ABS
bu
sine
ss a
rchi
tect
ure
Prop
osed
fund
ing
mod
elBo
ard
appr
oval
of
RABS
fund
ing
mod
elSu
bmit
Boar
d ap
-pr
oved
fund
ing
mod
el
to th
e N
atio
nal T
rea-
sury
for e
ndor
sem
ent
Impl
emen
t RA
BS
fund
ing
mod
el
Str
ateg
ic
Out
com
eP
erfo
rman
ce
Indi
cato
rB
asel
ine
Targ
ets/
Mile
ston
es
20
15\1
62
016
/17
20
17/1
82
018
/19
20
19/2
0
Ass
ured
Con
-tr
ol E
nviro
n-m
ent
Rais
e et
hica
l sta
ndar
dsEt
hics
Str
ateg
y an
d Im
ple-
men
tatio
n Pl
anRe
port
effe
ctiv
enes
s of
com
pone
nts
of
orga
nisa
tion’
s et
hics
pr
ogra
mm
e
Repo
rt e
ffect
iven
ess
of c
ompo
nent
s of
or
gani
satio
n’s
ethi
cs
prog
ram
me
Repo
rt e
ffect
iven
ess
of c
ompo
nent
s of
or
gani
satio
n’s
ethi
cs
prog
ram
me
Repo
rt e
ffect
iven
ess
of c
ompo
nent
s of
or
gani
satio
n’s
ethi
cs
prog
ram
me
Repo
rt e
ffect
iven
ess
of c
ompo
nent
s of
or
gani
satio
n’s
ethi
cs
prog
ram
me
Incr
ease
% o
f fra
ud d
e-te
cted
bef
ore
undu
e pa
ymen
ts a
re m
ade
Dev
elop
mea
sure
and
ba
selin
e10
% in
crea
se in
the
leve
l of f
raud
de-
tect
ed b
efor
e un
due
paym
ents
are
mad
e
15%
incr
ease
in th
e le
vel o
f of f
raud
de-
tect
ed b
efor
e un
due
paym
ents
are
mad
e
20%
incr
ease
in th
e le
vel o
f of f
raud
de-
tect
ed b
efor
e un
due
paym
ents
are
mad
e
25%
incr
ease
in th
e le
vel o
f of f
raud
de-
tect
ed b
efor
e un
due
paym
ents
are
mad
e
30%
incr
ease
in th
e le
vel o
f of f
raud
de-
tect
ed b
efor
e un
due
paym
ents
are
mad
e
Cont
ribut
e to
Roa
d Sa
fety
by
crea
ting
a cr
ash
data
base
, &
repo
rt o
n ro
ad c
rash
es
that
will
info
rm p
re-
vent
ativ
e m
easu
res
Base
d on
func
tiona
l Inf
or-
mat
ion
Colle
ctio
n Ag
ents
(IC
As)
at t
he e
nd o
f the
14
/15
FY
Des
ign
and
deve
lop
inte
rnal
road
cra
sh
data
base
Inte
rnal
road
cra
sh
data
base
func
tiona
l by
31
Mar
ch 2
017
Publ
ish
road
cra
sh
fore
cast
ing
repo
rtPr
ovid
e su
ppor
t in
the
deve
lopm
ent o
f na
tiona
l roa
d cr
ash
data
bank
Prov
ide
supp
ort i
n th
e de
velo
pmen
t of
natio
nal r
oad
cras
h da
taba
nk
Obj
ecti
ve 6
: Ini
tiat
ives
alig
ned
to t
he s
trat
egic
out
com
e of
adm
inis
trat
ive
disp
ensa
tion
alig
ned
to t
he R
AB
S B
ill
57
Roa
d A
ccid
ent
Fund
| St
rate
gic
Pla
n 20
15 –
20
20P
art
B |
Str
ateg
ic O
bjec
tive
s of
the
Fun
d
8.4
Fin
anci
al P
lan
8.4
.1 C
ash
Flo
w S
tate
men
t
Cas
h fl
ows
from
ope
rati
ng a
ctiv
itie
s2
014
20
152
016
20
172
018
20
192
02
0
Rece
ipts
Fuel
levi
es 1
9,65
1,21
9 2
1,68
2,82
0 3
0,49
2,24
6 3
3,35
9,74
1 3
3,69
3,33
8 3
4,03
0,27
2 3
4,37
0,57
4 Re
insu
ranc
e cl
aim
s re
ceiv
ed 1
53
- -
- -
- -
Oth
er in
com
e 1
,918
-
- -
- -
- 1
9,65
3,29
0 2
1,68
2,82
0 3
0,49
2,24
6 3
3,35
9,74
1 3
3,69
3,33
8 3
4,03
0,27
2 3
4,37
0,57
4
Paym
ents
Empl
oyee
cos
ts (9
07,1
72)
(1,1
78,2
67)
(1,2
96,0
94)
(1,4
25,7
03)
(1,5
11,2
46)
(1,6
01,9
20)
(1,6
98,0
36)
Clai
ms
expe
nditu
re (2
2,18
4,82
7)
(22,
221,
212)
(2
8,61
4,84
8)
(31,
263,
419)
(3
1,48
3,28
1)
(31,
687,
962)
(3
1,88
8,16
3)
Fina
nce
cost
s (2
8,94
6)
(12,
355)
(1
3,02
2)
(13,
712)
(1
4,53
5)
(15,
407)
(1
6,33
2)
Rein
sura
nce
prem
ium
s (2
2,57
1)
(26,
550)
(2
7,98
3)
(29,
466)
(3
1,23
4)
(33,
108)
(3
5,09
5)
Oth
er e
xpen
ditu
re (3
51,6
26)
(466
,711
) (5
17,1
68)
(543
,571
) (5
62,9
97)
(596
,777
) (6
32,5
83)
(23,
495,
142)
(2
3,90
5,09
5)
(30,
469,
116)
(3
3,27
5,87
2)
(33,
603,
293)
(3
3,93
5,17
4)
(34,
270,
208)
N
et c
ash
flow
s fr
om o
pera
ting
activ
ities
(3,8
41,8
52)
(2,2
22,2
75)
23,
131
83,
869
90,
045
95,
097
100
,366
Cash
flow
s fr
om in
vest
ing
activ
ities
Purc
hase
of p
rope
rty,
pla
nt &
equ
ipm
ent
(30,
516)
(7
1,50
0)
(78,
650)
(8
2,81
8)
(86,
959)
(9
1,30
7)
(95,
873)
Pr
ocee
ds o
n di
spos
al o
f pro
pert
y, p
lant
& e
quip
men
t -
- -
- -
- -
Purc
hase
of o
ther
inta
ngib
le a
sset
s (1
9,64
0)
(11,
000)
(1
2,10
0)
(12,
741)
(1
3,37
8)
(14,
047)
(1
4,75
0)
Net
cas
h flo
ws
from
inve
stin
g ac
tiviti
es (5
0,15
6)
(82,
500)
(9
0,75
0)
(95,
560)
(1
00,3
38)
(105
,355
) (1
10,6
22)
Net
incr
ease
/(de
crea
se) i
n ca
sh a
nd c
ash
equi
vale
nts
(3,8
92,0
08)
(2,3
04,7
75)
(67,
619)
(1
1,69
0)
(10,
292)
(1
0,25
7)
(10,
256)
Ca
sh a
nd c
ash
equi
vale
nts
at th
e be
ginn
ing
of th
e ye
ar 6
,143
,817
2
,504
,775
2
67,6
19
211
,690
2
10,2
92
210
,257
2
10,2
56
Inte
rest
inco
me
252
,966
6
7,61
9 1
1,69
0 1
0,29
2 1
0,25
7 1
0,25
6 1
0,25
6 Ca
sh a
nd c
ash
equi
vale
nts
at th
e en
d of
the
year
2,5
04,7
75
267
,619
2
11,6
90
210
,292
2
10,2
57
210
,256
2
10,2
56
Tabl
e C
ash
Flow
Sta
tem
ent
PA
RT
B
58
8.4
.2 S
tate
men
t of
Fin
anci
al P
erfo
rman
ce
Tabl
e: S
tate
men
t of
Fin
anci
al P
erfo
rman
ce
2
014
20
152
016
20
172
018
20
192
02
0
Reve
nue
from
non
-exc
hang
e tr
ansa
ctio
ns
Net
fuel
levi
es 2
0,27
8,01
1 2
2,17
5,82
3 3
2,63
0,00
7 3
4,05
5,58
8 3
3,77
4,29
1 3
4,11
2,03
4 3
4,45
3,15
5 Fl
b/f
4,1
41,9
18
4,7
68,7
10
5,2
61,7
13
7,3
99,4
74
8,0
95,3
21
8,1
76,2
74
8,2
58,0
37
Fl R
ecei
ved
19,
651,
219
21,
682,
820
30,
492,
246
33,
359,
741
33,
693,
338
34,
030,
272
34,
370,
574
Fl c
/f 4
,768
,710
5
,261
,713
7
,399
,474
8
,095
,321
8
,176
,274
8
,258
,037
8
,340
,618
Reve
nue
from
exc
hang
e tr
ansa
ctio
ns
Oth
er in
com
e 1
,918
-
- -
- -
- Re
insu
ranc
e re
venu
e 1
53
- -
- -
- -
Inve
stm
ent r
even
ue 2
36,3
61
67,
619
11,
690
10,
292
10,
257
10,
256
10,
256
2
38,4
32
67,
619
11,
690
10,
292
10,
257
10,
256
10,
256
LESS
EXP
ENSE
S
Clai
ms
expe
ndit
ure
36,
442,
094
30,
979,
064
33,
559,
058
35,
729,
946
37,
976,
971
40,
648,
022
43,
774,
603
Clai
ms p
aid
in ca
sh 2
2,28
0,09
4 2
2,22
1,21
2 2
8,61
4,84
8 3
1,26
3,41
9 3
1,48
3,28
1 3
1,68
7,96
2 3
1,88
8,16
3 Cl
aim
s acc
rual
- pr
oces
sed
but c
anno
t be
paid
du
e to
cash
cons
trai
nts
7
,842
,594
9
,415
,867
1
4,65
8,66
9 2
3,96
7,64
1 2
9,71
3,49
1 8
,254
,270
Prov
isio
n fo
r out
stan
ding
cla
ims:
Bala
nce
b/f
-82,
838,
000
-97,
000,
000
-97,
915,
258
-93,
443,
601
-83,
251,
459
-65,
777,
508
-45,
024,
078
Prov
isio
n fo
r out
stan
ding
cla
ims:
Bala
nce
c/f
97,
000,
000
97,
915,
258
93,
443,
601
83,
251,
459
65,
777,
508
45,
024,
078
48,
656,
249
Rein
sura
nce
prem
ium
s 2
2,57
1 2
6,55
0 2
7,98
3 2
9,46
6 3
1,23
4 3
3,10
8 3
5,09
5 Em
ploy
ee c
osts
907
,172
1
,178
,267
1
,296
,094
1
,425
,703
1
,511
,246
1
,601
,920
1
,698
,036
Gen
eral
exp
ense
s 3
77,0
94
466
,711
5
17,1
68
543
,571
5
62,9
97
596
,777
6
32,5
83
Dep
reci
atio
n an
d am
orti
sati
on 3
8,13
2 4
8,83
5 5
9,62
8 7
2,62
1 8
3,60
1 8
8,61
7 9
3,93
5 Fi
nanc
e co
sts
28,
946
12,
355
13,
022
13,
712
14,
535
15,
407
16,
332
Defi
cit f
or th
e ye
ar (1
7,29
9,56
6)
(10,
468,
340)
(2
,831
,256
) (3
,749
,139
) (6
,396
,036
) (8
,861
,562
) (1
1,78
7,17
2)
59
Roa
d A
ccid
ent
Fund
| St
rate
gic
Pla
n 20
15 –
20
20P
art
B |
Str
ateg
ic O
bjec
tive
s of
the
Fun
d
8.4
.3 S
tate
men
t of
Fin
anci
al P
osit
ion
Ass
ets
20
142
015
20
162
017
20
182
019
20
20
Curr
ent A
sset
s
Cash
and
cas
h eq
uiva
lent
s 2
,504
,775
2
67,6
19
211
,690
2
10,2
92
210
,257
2
10,2
56
210
,256
Rece
ivab
les
from
non
-exc
hang
e tr
ansa
ctio
ns 4
,768
,710
5
,261
,713
7
,399
,474
8
,095
,321
8
,176
,274
8
,258
,037
8
,340
,618
Rece
ivab
les
from
exc
hang
e tr
ansa
ctio
ns 1
6,11
6 1
7,08
3 1
8,10
8 1
9,19
4 2
0,34
6 2
1,56
7 2
2,86
1
Oth
er fi
nanc
ial a
sset
s 1
32,9
74
140
,952
1
49,4
10
158
,374
1
67,8
77
177
,949
1
88,6
26
Cons
umab
le s
tock
3,6
03
3,8
19
4,0
48
4,2
91
4,5
49
4,8
22
5,1
11
7
,426
,178
5
,691
,187
7
,782
,730
8
,487
,473
8
,579
,303
8
,672
,631
8
,767
,472
Non
-Cur
rent
Ass
ets
Prop
erty
, pla
nt &
equ
ipm
ent
246
,997
2
78,7
85
308
,745
3
31,7
92
350
,006
3
61,2
13
382
,886
Inta
ngib
le a
sset
s 2
1,17
2 2
3,04
9 2
4,21
1 2
4,10
3 2
2,62
5 1
9,52
8 2
0,70
0
2
68,1
69
301
,834
3
32,9
56
355
,894
3
72,6
31
380
,741
4
03,5
86
Tota
l Ass
ets
7,6
94,3
47
5,9
93,0
21
8,1
15,6
86
8,8
43,3
68
8,9
51,9
34
9,0
53,3
72
9,1
71,0
58
Li
abili
ties
Curr
ent l
iabi
litie
s
Paya
bles
from
exc
hang
e tr
ansa
ctio
ns 1
39,0
09
147
,350
1
56,1
91
165
,562
1
75,4
96
186
,025
1
97,1
87
Oth
er fi
nanc
ial l
iabi
litie
s 4
60,5
79
8,3
30,8
08
17,
775,
968
32,
465,
687
56,
466,
241
86,
214,
620
94,
505,
872
Prov
isio
n fo
r out
stan
ding
cla
ims
24,
083,
166
19,
583,
052
18,
688,
720
16,
650,
292
13,
155,
502
9,0
04,8
16
9,7
31,2
50
Oth
er p
rovi
sion
s 8
48,5
61
899
,475
9
53,4
43
1,0
10,6
50
1,0
71,2
89
1,1
35,5
66
1,2
03,7
00
2
5,53
1,31
5 2
8,96
0,68
4 3
7,57
4,32
2 5
0,29
2,19
1 7
0,86
8,52
7 9
6,54
1,02
8 1
05,6
38,0
08
Non
-Cur
rent
Lia
bilit
ies
Oth
er fi
nanc
ial l
iabi
litie
s 6
16
653
6
92
734
7
78
824
8
74
Prov
isio
n fo
r out
stan
ding
cla
ims
72,
916,
834
78,
332,
206
74,
754,
881
66,
601,
167
52,
622,
007
36,
019,
263
38,
924,
999
Empl
oyee
ben
efit o
blig
atio
n 4
3,34
0 4
5,94
0 4
8,69
7 5
1,61
9 5
4,71
6 5
7,99
9 6
1,47
9
7
2,96
0,79
0 7
8,37
8,80
0 7
4,80
4,27
0 6
6,65
3,51
9 5
2,67
7,50
0 3
6,07
8,08
6 3
8,98
7,35
2
Tota
l Lia
bilit
ies
98,
492,
105
107
,339
,484
1
12,3
78,5
92
116
,945
,710
1
23,5
46,0
28
132
,619
,113
1
44,6
25,3
60
Net
Defi
cit
(90,
797,
758)
(1
01,3
46,4
63)
(104
,262
,905
) (1
08,1
02,3
42)
(114
,594
,094
) (1
23,5
65,7
41)
(135
,454
,303
)
Tabl
e: S
tate
men
t of
Fin
anci
al P
osit
ion
PART B
60 Road Accident Fund | Strategic Plan 2015 – 2020
8.5 Human Capital Management
The creation and filling of leadership positions, e.g. the new Executive positions, the additional tier of General Managers and Senior Managers have opened more communication lines resulting in quicker response and turnaround times and ensur-ing that decisions are made timeously.
The creation of Regional General Managers and Senior Man-agers for both Operations and Support in the Regions has allowed for more effective and efficient stakeholder relations with the provincial and local Government tiers.
The entrenchment of the new organisational structure, approv-al of new delegations, decentralisation of functions (especially in the regions) have allowed regions to be semi-autonomous and deliver services in an efficient and effective manner where they are actually required.
The Fund’s organisational structure is illustrated in figure 3 on the next page.
8.5.1 RAF Organisational Structure Review
8.5.2 Creating Value through Human Resource Capacity
The RAF is in the process of a significant transformation and change in its stra-tegic planning process and operational framework. The Human Capital function has primarily been perceived and criticised for its failure to meet expectations and to deliver value. The function is seen as slow, unresponsive and has failed to build trust, respect and credibility amongst its stakeholders. The team recognis-es the need to adapt its operating model and its role based on best practices.
The Human Capital Strategy (HCS) describes how the RAF will achieve its role in contributing to the achievement of overall organisational goals. It describes how it will ensure the culture, capacity and capability of the organisation in such a way that there are necessary resources not just in terms of people and skills, but in respect of systems and processes to achieve the Fund’s strategic objectives.
The essence of the HCS is to have a real and sustainable impact on the achieve-ment of the RAF’s strategic objectives and on business performance. It further recognises the need for staff and the organisation to increase capacity for flexibility, learning and change in order to contribute most effectively to the achievement of the organisational goals and further employees’ learning and development within a framework of effective performance management.
8.5.3 Projected Human Resource Capacity
The Fund has in the 2013 financial year undertaken an organisational structural re-alignment process. During this phase a different set of skills was acquired in different geographic areas throughout South Africa. The Human Resource Strategy and Plan are based on the strategic outcomes and performance indicators and targets detailed in this Plan. In the past financial year, the Fund increased the number of employees from 2,288 to 2,555.
It is expected that the headcount will increase from a baseline of 2,555 as at 31/03/15 to 2,792 in the 2015/16 finan-cial year as a result of the continuous implementation of the new organisa-
6161Part B | Strategic Objectives of the Fund
Executive AuthorityMinister of Transport
Honourable Dipuo Peters, MP
Board of Directors
Chief Executive Officer
GM: Monitoring and Assistance
SM: Analytical Reporting
GM: Legal, Compliance and
RegulationSM: Financial Accounting
SM: Organisational Development
SM: Application Development and
Modernisation
SM: Governance, Risk and Security
SM: New Service, Architecture and Process Management
SM: Application Development and
Support
SM: Infrastructure
SM: Business Support Service
SM: Communications
SM: PR and Media
SM: Marketing
SM: Call Centre
SM: Social & Digital
Media
SM: Capacity and Capability
Building
SM: Centre of Expertise
SM: Shared Services
SM: Learning and Development
SM: Customer Service
SM: Facilities Management
SM: Management Accounting
SM: Financial Reporting
SM: Treasury
SM: Supply Chain Management
GM: Risk Management
GM: Project Management
Office
GM: Stake-holder Relations
Management
GM: Forensic Investigations
SM: Strategy, Risk and
Compliance
SM: Strategy and Reporting
RGM: Johannesburg
RGM: Pretoria
RGM: Durban
RGM: Cape Town
RGM: East London
Chief Operations Officer
Chief Strategy Officer
Chief Financial Officer
Chief Human Capital Officer
Chief Information Officer
Chief Marketing Officer
Chief Audit Executive
SM: Internal Audit
Chief Corporate Secretariat
Figure 3: Top Structure of the Fund
tional structure, which seeks to rationalise the historic struc-ture, control weaknesses and operational impediments. No staff increase is expected for the rest of the MTEF period. The
increase in the 2014/15 financial year is aimed at ensuring that the Fund is fully capacitated to fulfil its mandate and achieve the proposed strategic objectives illustrated above.
64 Road Accident Fund | Strategic Plan 2015 – 2020
PART C
9.1 RAF Funding Requirements
Over the past two years, the Fund has expressed its con-cern to Government that the RAF Fuel Levy is determined with little regard for the main drivers of the Fund’s claims expenditure, i.e. the number of accidents on the roads, number of vehicles driven, the volume and quantum of the benefits payable by the Fund, and various other economic factors such as the inherent inflation of the benefit levels.
To this end, the Fund has developed a Revenue Require-ment Model (RRM) that incorporates all of the above in or-der to scientifically and objectively determine the required fuel levy for any given future accident year. The model projects the claim numbers, income statement, balance sheet and cash flow statements in order to estimate the future financial position of the Fund.
It should be noted that, if there are no cash flow con-straints, the actual cost of providing the benefits would not depend on the fuel levy. If the initial levy is lower, higher levies will be required in future. However, with cash flow constraints, the Fund cannot settle claims timeously. This leads to increased costs as more claims are referred to the Courts and expensive litigation processes.
Considering all of the above, the Fund would ideally require income that would not place a constraint on its ability to settle claims. This would imply higher initial levies that could remain level or even reduce over time.
This document presents financial forecasts based on an average fuel levy increase of not more than 50c per litre. The assumption is based on the approved levies for the 2014 financial year and the discussions which have been taking place between the Fund and National Treasury.
9. PART C: LINKS TO OTHER PLANS
9.2 Fuel Levy Increase
The RAF Fuel Levy has been increased by 50 cents per litre per annum for the MTEF period. As can be seen in the explanatory narrative accompanying the database, this levy is insufficient to pay all the claims that the Fund can process.
Expenditure Trends
9.3 Claims Payments
The productivity in claims settlements is expected to remain constant over the MTEF period. The extra cash injection re-sulting from the 50 cents increase, will be used to reduce the amount of accounts payable from the previous year. Previous claims inflation is expected to be 15% for 2014/15 and for the rest of the MTEF period. This is the long-term average claims inflation over the period 2006 to 2014. This was derived at by comparing the Fund’s average claim payments from year-to-year over this period. It must be noted that the full effect of these increases are not reflected in the claims payments in the above table due to cash constraints. Therefore, the claims pay-ments reported above have been restricted to cash available for the current financial year and for the rest of the MTEF period.
It is worth noting that the increase in productivity in claims set-tlement per the Annual Performance Plan for the financial year 2013/14 was assumed to be 20% and the actual increase for the year was 19%.
The fact that the settlement of claims must be limited to availa-ble funding has a material negative impact on the ability of the institution to execute its mandate successfully. The following ta-ble shows the shortfall between the claims operational capacity and cash available for claims payment:
6565Part C | Links to Other Plans
2015 2016 2017 2018 2019 2020
R’000 R’000 R’000 R’000 R’000 R’000
Available for claims settlement 22 421 212 28 814 848 31 463 419 31 683 281 31 887 962 32 088 163
Operational claims limit 30 063 806 38 030 715 45 922 088 55 450 921 63 768 560 73 333 844
Claims Financial Shortfall 7 842 594 9 415 867 14 658 669 23 967 641 29 713 491 8 254 270
The level of productivity that is main-tained results in a reduction of the ORC over the MTEF period, but the IBNR increases.
The following table illustrates how the provision reduces over the MTEF period:
2015 2016 2017 2018 2019 2020
R’000 R’000 R’000 R’000 R’000 R’000
Provision for outstanding claims: Balance c/f
97 915 258 93 443 601 83 251 459 65 777 508 45 024 078 48 656 249
9.4 Provision for Outstanding Claims (ORC & IBNR)
The IBNR portion grows with inflation-related factors and ORC portion reduces as the Accounts Payable increases and a sustained reduction in new registrations persists.
9.5 DeficitThe deficit increases throughout the MTEF period mainly due to the increase in claims settlements and shortage of cash.
66 Road Accident Fund | Strategic Plan 2015 – 2020
PART C
9.6 Goods and Services and Compensation of Employees
9.6.1 Goods and Services The baseline for goods and services expenditure for the MTEF period is the approved budget for the financial year 2014/15. Furthermore, the ex-penditure increases by the CPI rate of 5.6%, 5.5% and 5.0% for 2015/16, 2016/17 and 2017/18 re-spectively as per the National Treasury guidelines.
Furthermore, a provision of R25 million per annum for 2015/16 to 2017/18 is included in this expenditure. This provision relates to ICT infra-structure enhancement, ICT additional staff and costs related to preparation for the implemen-tation of RABS in the ICT environment. The total amount to implement the ICT strategy is R106 million, R60 million and R60 million for 2015/16 to 2017/18 respectively. The RAF will engage DoT and National Treasury regarding funding for the implementation of the strategy during the MTEF submission later this financial year.
9.7 Compensation of Employees
The staff complement is projected to increase to enable the Fund to achieve its service deliv-ery requirements. It is expected that the head-count will increase from a baseline of 2,555 as at 31/03/15 to 2,792 in the 2015/16 financial year as a result of the continuous implementation of the new organisational structure, which seeks to rationalise historic structure, control weaknesses and operational impediments. No staff increase is expected for the rest of the MTEF period.
9.8 Cash Balances The RAF is currently experiencing cash flow constraints and cannot pay all the claims it can process. The cash balances throughout the MTEF period are around R200 million, while our target is R2.1bn available cash per month.
9.9 Average Claim Amounts
Average claim amounts, in current terms, are also taken from the latest actuarial valuation report as at 31 December 2014 and entered separately for pre- and post-Amendment Act claims and per claim type. The averages change over time because, on average, larger claims take longer to finalise than smaller claims.
9.10 Delay between Accident Date, Reporting Date and Settlement Date
The assumed delay between the accident date, reporting date and date of settlement has a major influence on the Fund’s cash flow. It is expected that, the sooner claims are settled, the lower the ultimate cost. However, the magnitude of the saving on earlier settlement (or extra cost in delayed settlement) has not been estimated. Historic average amounts are expected to be repeated with some efficiency improvements in the settlement delay between reported and settlement dates.
9.11 Finance Model: Based on an Average Increase of 50c per Litre
9.11.1 Model Assumptions and ResultsThe key inputs and outputs are based on the 50c increase as determined by the model for the 2016 to 2020 financial years. It is important to note that the model is based on the results of the actuarial valuation conducted in February 2015 and that the projections of the deficit were also made at that time with the information available then. Claims are paid as they become due, resulting in utilisation of all available cash reserves.
6767Part C | Links to Other Plans
TableCash Flow Statement
Cash flows from operating activities 2015 2016 2017 2018 2019 2020
Receipts
Fuel levies 21 682 820 30 492 246 33 359 741 33 693 338 34 030 272 34 370 574
Reinsurance claims received - - - - - -
Other income - - - - - -
21 682 820 30 492 246 33 359 741 33 693 338 34 030 272 34 370 574
Payments
Employee costs (1 178 267) (1 296 094) (1 425 703) (1 511 246) (1 601 920) (1 698 036)
Claims expenditure (22 221 212) (28 614 848) (31 263 419) (31 483 281) (31 687 962) (31 888 163)
Finance costs (12 355) (13 022) (13 712) (14 535) (15 407) (16 332)
Reinsurance premiums (26 550) (27 983) (29 466) (31 234) (33 108) (35 095)
Other expenditure (466 711) (517 168) (543 571) (562 997) (596 777) (632 583)
(23 905 095) (30 469 116) (33 275 872) (33 603 293) (33 935 174) (34 270 208)
Net cash flows from operating activities
(2 222 275) 23 131 83 869 90 045 95 097 100 366
Cash flows from investing activities
Purchase of property, plant & equipment
(71 500) (78 650) (82 818) (86 959) (91 307) (95 873)
Proceeds on disposal of property, plant & equipment
- - - - - -
Purchase of other intangible assets (11 000) (12 100) (12 741) (13 378) (14 047) (14 750)
Net cash flows from investing activities (82 500) (90 750) (95 560) (100 338) (105 355) (110 622)
Net increase/(decrease) in cash
and cash equivalents (2 304 775) (67 619) (11 690) (10 292) (10 257) (10 256)
Cash and cash equivalents
at the beginning of the year 2 504 775 267 619 211 690 210 292 210 257 210 256
Interest income 67 619 11 690 10 292 10 257 10 256 10 256
Cash and cash equivalents at the end of the year
267 619 211 690 210 292 210 257 210 256 210 256
68 Road Accident Fund | Strategic Plan 2015 – 2020
PART C
TableStatement of Financial Performance
Revenue from non-exchange transactions 2015 2016 2017 2018 2019 2020
Net fuel levies 22 175 823 32 630 007 34 055 588 33 774 291 34 112 034 34 453 155
Fl b/f 4 768 710 5 261 713 7 399 474 8 095 321 8 176 274 8 258 037
Fl Received 21 682 820 30 492 246 33 359 741 33 693 338 34 030 272 34 370 574
Fl c/f 5 261 713 7 399 474 8 095 321 8 176 274 8 258 037 8 340 618
Revenue from exchange transactions
Other income - - - - - -
Reinsurance revenue - - - - - -
Investment revenue 67 619 11 690 10 292 10 257 10 256 10 256
67 619 11 690 10 292 10 257 10 256 10 256
LESS EXPENSES
Claims expenditure 30 979 064 33 559 058 35 729 946 37 976 971 40 648 022 43 774 603
Claims Paid In Cash 22 221 212 28 614 848 31 263 419 31 483 281 31 687 962 31 888 163
Claims Accrual - processed but cannot be paid due to cash constraints
7 842 594 9 415 867 14 658 669 23 967 641 29 713 491 8 254 270
Provision for outstanding claims: Balance b/f
-97 000 000 -97 915 258 -93 443 601 -83 251 459 -65 777 508 -45 024 078
Provision for outstanding claims: Balance c/f
97 915 258 93 443 601 83 251 459 65 777 508 45 024 078 48 656 249
Reinsurance premiums 26 550 27 983 29 466 31 234 33 108 35 095
Employee costs 1 178 267 1 296 094 1 425 703 1 511 246 1 601 920 1 698 036
General expenses 466 711 517 168 543 571 562 997 596 777 632 583
Depreciation and amortisation 48 835 59 628 72 621 83 601 88 617 93 935
Finance costs 12 355 13 022 13 712 14 535 15 407 16 332
Deficit for the year (10 468 340) (2 831 256) (3 749 139) (6 396 036) (8 861 562) (11 787 172)
6969Part C | Links to Other Plans
9.12 Materiality Framework
The Materiality and Significance Framework that is re-quired to be incorporated in the Strategic Plan (section 30) of the Treasury Regulations is listed below.
9.12.1 Definitions and Standards
• Audited Financial Statements: FY 2013/2014 (AFS)• Approved Annual Budget: FY 2013/2014 (AAB)• Approved Revised Strategic Plan: 1 April 2013 to 31
March 2017 (ASP)• Event: An activity that has the elements of income
and expenditure• Trading venture: An activity that has the elements of
buying and selling of products and/or services• Total income: Total income excluding the income
from events and trading ventures• Total expenditure: Total expenditure excluding event
and trading venture expenditure
9.12.5 Materiality Framework Overview:PFMA Reference Description Materiality/
Significance
Section 55(2) Reporting in the annual report and financial statements of criminal conduct, irregular expenditure and fruitless and wasteful expenditure during the financial year.
R10 million
Section 54(2) Approval by the executive authority of transaction involving significant partner-ships, trusts, and unincorporated joint ventures or similar arrangements; acqui-sition and disposals of significant shareholdings in a company; commencement and cessation of significant business activity; significant change in the nature or extent of interest in a significant partnership, trust, unincorporated joint venture or similar arrangement.
5%
9.12.2 Applicable Sections of the PFMA• Section 50(1)• Section 54(2)• Section 55(2)• Section 66(3)
9.12.3 Treasury Regulation• 28.1.5
9.12.4 BackgroundThe following overview seeks to provide the Materiality Framework of the Fund. The section, Materiality Framework Overview, below summa-rises the aspects which have been classified as material both qualitative-ly and quantitatively within the RAF.
70 Road Accident Fund | Strategic Plan 2015 – 2020
PART C
9.12.6 Detailed Materiality Framework:PFMA Reference Description Materiality/ Significance
4.1 Section 50: Fiduciary Duties of Accounting
AuthorityValue (Quantitative) Nature of Event
(Qualitative)
(1) Accounting authority must –
(c) on request, disclose to the executive authority respon-sible, all material facts which in any way may influence the decisions or actions of the executive authority
(a) Any unbudgeted transaction of which the amount exceeds 20% of the total value of assets per the AFS
(b) Any budgeted event where income is a legitimate expectation (e.g. theatrical production) where the actual income is less than 20% of the total expenditure
(c) Any trading venture where income is exceeded by expenditure by more than 20% of expenditure
(d) Total actual income is less than budgeted income by more than 20% of budgeted income
(e) Total actual expenditure is more than budgeted income by more than 20% of budgeted expenditure
(a) Any unplanned event that affects the core purpose or mandate of entity as per the ASP
(b) Any activity that is outside the parameters of each public entity’s enabling legislation
4.2 Section 54: Information to be submitted by the
Accounting Authority
Value (Quantitative) Nature of Event (Qualitative)
(2) Before a public entity concludes any of the following transactions, the account-ing authority for the entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction
N/A
(b) Participation in a significant partnership, trust, unincorpo-rated joint venture or similar arrangement
Any transaction of which the amount exceeds 5% of the total value of assets as per the AFS
Any unplanned event per the ASP that may affect the core purpose or mandate of the entity
(c) Acquisition of disposal of a significant shareholding in a company
Any transaction of which the amount exceeds 5% of the total value of assets as per the AFS
Any unplanned event as per the ASP that may affect the core purpose or mandate of the entity
(d) Acquisition or disposal of a significant asset
Any transaction of which the amount exceeds 5% of the total value of assets as per the AFS
Any unplanned event as per the ASP that may affect the core purpose or mandate of the entity
7171Part C | Links to Other Plans
PFMA Reference Description Materiality/ Significance
(e) Commencement or cessa-tion of a significant business activity
Any unplanned event as per the ASP that may affect the core purpose or mandate of the entity
4.1 Section 50: Fiduciary Duties of Accounting
AuthorityValue (Quantitative) Nature of Event
(Qualitative)
(2) The annual report and financial statements must:
(b) include particulars of:
(i) any material losses through criminal conduct and,
(a) Any loss of which the amount exceeds 5% of the total value of assets as per the AFS
Any unplanned loss as per the ASP that may affect the core purpose or mandate of the entity
(ii) Any irregular and wasteful or fruitless expenditure that occurred during the year
(iii) Any losses recovered or written off
4.4 Section 66: Restrictions on
Borrowing, Guarantees and Other Commitments
Value (Quantitative) Nature of Event (Qualitative)
(3) Public entities may only through the following persons borrow money, or issue a guar-antee, indemnity or security, or enter into any other trans-action that binds or may bind that public entity to any future commitment:
(b) A national Government business enterprise listed in Schedule 3 and authorised by notice in the National Govern-ment Gazette by the Minister: the accounting authority for that Government business enterprise, subject to any conditions the Minister may impose
Any borrowings, guarantees and other commitments of which the amount exceeds 5% of the total value of liabilities as per the AFS
Any borrowings, guarantees and other commitments
72 Road Accident Fund | Strategic Plan 2015 – 2020
PART C
Concluding Remarks
This Five-year Strategic Plan was developed in alignment with the shift of Government to an outcomes-orientated monitor-ing and evaluation approach. The focus of the plan is therefore centred on results-based management. This approach involves people, resources and processes which are integrated in the delivery of the following key strategic outcomes, namely:• Efficient claims processing• Accessible services• Effective financial management/Health• Optimal ICT functionality• Improved people management• Administrative dispensation aligned to the RABS Bill• Assured control environment
The Fund continues to form a vital part of the ‘social protec-tion’ fabric of our society. This Strategic Plan considers, in brief, the strategic context within which the organisation operates. Based on this context, the Fund, through engagement with various stakeholders, has made some strategic decisions. These strategic decisions relate to the seven (7) pillars mentioned above. This strategy is a key starting point in this regard.
Aside from the considerable inefficiencies in the current scheme, the inevitable substitution of benefits between a mandatory social insurance scheme and the Fund necessitates its reform within the context of a comprehensive system of social security. An important outcome of this reform process should be: the removal of unnecessary inefficiencies associated
with the provision of entitlements; the continued protection of access to medical care associated with all road accidents; and ensuring that families are protected from the loss of a bread-winner or caregiver.
These protections are particularly important in relation to low-income groups. However, the mandating and pooling of third-party insurance for road accidents, where this covers any residual liability, after accounting for social security benefits, remains inherently rational. Without such central pooling, fam-ilies could be exposed to severe losses resulting from accidents where these are resolved privately. In the absence of central pooling, inefficient private insurance products would become available, with variable coverage.
A reform of the Fund holds many opportunities for improved social security protection within the context of a comprehen-sive system of social security. This could be achieved through the rationalisation of benefits, a reduced inefficiency driven by the fault system, and the improvement in medical protection.
Such a reform should see the Fund change its focus away from assessments of fault and liability and toward protecting the most vulnerable, which would include those who do not have contributory protection against death and disability. Further-more, it will contribute towards the establishment of a uniform national system for emergency services.
7373Part C | Links to Other Plans
10. Part C: Links to Other Plans
10.1 Strategy Alignment to the National Development Plan (NDP)
NDP RAF
Focus Area Outcome Strategic Objective Indicators
Economic infra-structure
• Behavioural change to reduce environ-mental, social and economic cost of road crashes
Accessible services • Community campaigns (RAF on the Road); and
• Road safety initiatives with SANCO SDI.
Health care for all • Reduce injury, accidents and violence by 50% from 2010 levels
Efficient claims processing
• Implement Post-crash Care Strategy (Pillar 5).
Social protection • Short-term reforms focusing on broadening coverage of existing social security benefits
Administrative dis-pensation aligned to the RABS Bill
• Participate in the amendment to the current RAF Act;
• Participate in the establishment of the RABS legislative framework; and
• Transition RAF to RABS.
Building a capable and developmental state
• Make the public service careers of choice;
• Develop technical and specialist pro-fessional skills;
• Strengthen delegation, accountability and oversight;
• The developmental potential of SOEs.
Improve people management
• Improved performance management out-comes;
• Conduct skills assessment and develop skills strategy;
• Maintain EE targets;• Manage absenteeism; and• Implement Gender Policy.
Fighting corruption • A corruption-free society, a high ad-herence to ethics throughout society and a Government that is accountable to its people
Assured control environment
• Raise ethical standards;• Improve fraud detection and management;
and• Improve internal controls.
Nation building and social cohesion
• A society where opportunity is not de-termined by race or birth right; where citizens accept that they have both rights and responsibilities
• A united, prosperous, non-racial, non-sexist and democratic South Africa
Effective financial management and improve people management
• Develop and implement B-BBEE policy and plan, with youth and women prioritised; and
• Maintain EE targets in accordance with the NEAP requirements.
76 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
ANNEXURE A: TECHNICAL INDICATOR DESCRIPTION AND EXAMPLES
Objective 1: Efficient claims processing
Indicator number and title 1. Reduce number of open claims
Short DefinitionTo improve service delivery and effectively deliver on the mandate, more emphasis is placed on reducing the backlog by increasing the number of claims finalised. Open claims are claims that still await payment of compensation and cost.
Purpose/ImportanceThe purpose of this indicator is to measure productivity of the Fund in relation to the finalisa-tion of claims both personal and supplier
Source/Collection of data Claims system.
Method of calculationCount the number of claims outstanding at financial year-end. These claims are classified as “O” and “R” , “RD” “VO” “V V” & “PS” status.
Data limitations Claims that have been finalised can be reopened in subsequent financial years.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator No.
Desired performanceReduced number of claims outstanding at the end of each financial year (FY 2016 –188,935; FY 2017 – 177,991; and FY 2018 - 169,578).
Indicator responsibility Chief Operations Officer.
7777Annexure A | Technical Indicator Descriptions
Indicator number and title 2. To reduce the average age of open claims
Short Definition
This indicator is designed to enable the Fund to identify long outstanding claims for clearing through initiatives such as Siyenza. This indicator will also ascertain the successful implemen-tation of the developed initiatives to clear long outstanding claims and determine whether further interventions are required.
Purpose/Importance To identify long outstanding claims for follow-up and subsequent clearing.
Source/Collection of data Claims system.
Method of calculationAverage age of all open files at reporting date, i.e. difference between “registered on” and reporting date.
Data limitations None.
Type of indicator Outcome.
Calculation type Quantitative.
Reporting cycle Annual.
New indicator Yes.
Desired performance Identify long outstanding claims to reduce the average age of open claims.
Indicator responsibility Chief Operations Officer.
78 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 3. Increased % of claims verified by objecting to or accepting originated claims within 60 days
Short Definition
Section 24 (5) of the Road Accident Fund Act, 1996 (Act No. 56 of 1996), as amended, states that: if the Fund or the agent does not, within 60 days from the date on which a claim was sent by registered post or delivered by hand to the Fund or such agent as contemplated in subsection (1), object to the validity thereof, the claim shall be deemed to be valid in law in all respects.
Purpose/ImportanceCompliance to section 24 (5) of the Road Accident Fund Act, 1996 (Act No. 56 of 1996), as amended will ensure that all invalid claims are objected and valid claims are accepted within the prescribed period.
Source/Collection of data Claims system.
Method of calculation
Number of claims where status moved from “RD” to “VO” or “V V“ within 60 days. Target is measured as:
Objected Claims: - Claims objected within 60 days divided by the number of total claims objected.
Accepted Claims: - Claims accepted within 60 days divided by the number of total claims accepted.
Data limitations None.
Type of indicator Outcome.
Calculation type Quantitative.
Reporting cycle Annual.
New indicator Yes.
Desired performanceIncreased % of claims objected and/or accepted within 60 days as required by section 24 (5) of the Road Accident Fund Act, 1996 (Act No. 56 of 1996), as amended.
Indicator responsibility Chief Operations Officer.
7979Annexure A | Technical Indicator Descriptions
Indicator number and title 4. % increase in direct claims originated
Short Definition
The Fund has in the past years undertaken to expand its national footprint to improve acces-sibility and availability of its services directly to claimants in order to reduce legal costs and ensure that claimants are fairly compensated in respect of all benefits due to them.
The Fund therefore aims to increase the percentage of personal claims registered directly (those claims that are not represented by an attorney) to 2,5% in comparison to registered personal claims represented by an attorney.
Purpose/Importance
With the increase in the number of origination centres, claimants are encouraged to register personal claims directly with the Fund, thereby increasing the number of personal claims registered directly in comparison to personal claims registered through attorneys. This will also induce a decrease in legal costs.
Source/Collection of dataManual information collected through various origination centres and captured on claims system.
Method of calculation
Count of all direct personal claims registered during the financial year.
Divide by the count of total number of (direct and represented) personal claims registered during the financial year.
For the Fund to achieve the target, 30%of personal claims registered during the financial year should be made up of personal claims registered directly.
Data limitations None.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator No.
Desired performanceIncreased direct claims originated over the five-year planning period, with direct personal claims as a percentage of total personal claims Increase by 2.5% from the previous years’ results. Year-on-year.
Indicator responsibility Chief Operations Officer.
80 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 5. Increased % of direct personal claims settled as a % of total personal claims settled
Short DefinitionTo improve service delivery by improving the time taken to process personal injury claims registered directly with the Fund and reducing legal costs.
Purpose/ImportanceTo improve accessibility and availability of social services offered by the Fund, encourage direct claiming and reduce legal costs.
Source/Collection of data Claims system.
Method of calculation
Count the number of direct personal claims settled in the financial year; divide by
Count of total number of personal claims settled in the financial year (including direct per-sonal claims) x 100.
For the target to be achieved, 5% of total personal claims settled should be direct personal claims.
Data limitations None.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator Yes.
Desired performance
To increase the percentage of direct personal claims settled to improve service delivery of accident victims claiming directly with the Fund and ultimately reduce legal costs. Increase by 2.5% from the previous years’ results, year-on-year to the following approximated figures: FY 2016 – 12,713; FY 2017 – 14,034; and FY 2018 – 15,522 ).
Indicator responsibility Chief Operations Officer.
8181Annexure A | Technical Indicator Descriptions
Indicator number and title 6. Reduction in legal costs by 2% annually
Short Definition
Reduce legal costs incurred and deemed by the Fund as avoidable. These costs reflect the inadequacies of the existing fault-based and common law system of compensation.
Approximately 80% of registered claims are litigated, resulting in the increase in the cost associated with processing of claims. In order to pursue financial sustainability it is therefore imperative to reduce these costs.
Purpose/Importance
The purpose of this indicator is to measure the ratio at which the Fund pays legal costs (claim related costs) compared to actual compensation to claimants.
The Fund aims to reduce the cost-to-compensation ratio through the reduction of costs that can be avoided and fairly compensate claimants.
Source/Collection of data Road Accident Fund SAP financial data and claims data.
Method of calculation
Sum of all legal costs excluding expert, assessors’ fees etc. (all costs and expenses grouped as claimant and agent), excluding writs-related costs, relating to compensation.
Divide by the sum of legal costs and capital payments multiplied by 100.
A reduction of 2% is achieved by comparing cost-to-compensation ratio for the current peri-od to the previous financial period’s ratio.
Data limitationsInstances of inaccurate capturing of legal cost payments on payment system, but the audit being conducted addresses the system-related gaps.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator No.
Desired performanceReduction in legal costs over the 5-year strategic planning period, with reductions as a per-centage of claims payments (FY 2016 target – 16% (note that the base will be based on the actual audited results at the end of 2015 FY); FY 2017 – 14%; and FY 2018 – 12%).
Indicator responsibility Chief Operations Officer.
82 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 7. Implement Post-Crash Care Strategy (Pillar 6)
Short Definition
Post-crash care is designed to ensure that the injured are taken care of in an effective and efficient manner by resolving all the identified issues within Post-Claims Settlement through a tactical approach and ensuring that all Undertakings-related functions are prioritised. The strategy document aims to improve the effectiveness and efficiency of the Post-Claims Settle-ment Department – hereinafter referred to as Pillar 6.
Purpose/ImportanceTo overhaul Pillar 6 and address the lack of capacity to the Pillar 6 mandate; caregiver compensation processing, variation and ICT/System-related challenges; process and policy implementation; and to defined demarcations (for the entire RAF).
Source/Collection of data Post-Crash Care Strategy operational output.
Method of calculation
Based on valid quarterly caregiver submission documentation (HR Forms), calculate the num-ber of days taken to pay caregivers on a monthly basis. For the target to be achieved, monthly payments (in a quarterly cycle) should be made on a monthly basis within 30 days from date of submission of quarterly forms (HR forms).
Data limitations None.
Type of indicator Outcome.
Calculation type Non-Cumulative.
Reporting cycle Annually.
New indicator Yes.
Desired performance Operationalised post-care strategy.
Indicator responsibility Chief Operating Officer.
8383Annexure A | Technical Indicator Descriptions
Objective 2: Initiatives aligned to the strategic outcome of providing accessible services
Indicator number and title 8. Increase accessibility to the RAF
Short DefinitionIncrease accessibility to the RAF services by establishing new access points as per the 2015/16 accessibility channel review report.
Purpose/ImportanceTo increase accessibility and availability of services offered by the Fund to all beneficiaries throughout South Africa.
Source/Collection of data Number of new access points operational by year-end.
Method of calculation 1 Report on recommended location (s)/access points to expand RAF’s accessibility.
Data limitations Manual count.
Type of indicator Output.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator Yes.
Desired performance Increased number of access points to RAF services.
Indicator responsibility Chief Marketing Officer.
84 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 9. Increase the number of claimants engaged at RAF events (ROTR and other events)
Short Definition 28,750 claimants engaged at road shows and various other RAF events in the 2015/16 FY.
Purpose/ImportanceTo increase awareness, accessibility and availability of services offered by the Fund to all ben-eficiaries throughout South Africa.
Source/Collection of data Registration of number of attendees at road show events and other RAF events.
Method of calculationCount the number of claimants engaged at road shows and other RAF events per financial year.
Data limitations Manual count.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator No.
Desired performanceIncreased number of claimants engaged at road shows (FY 2016 – 28,750; FY 2017 – 33,000 and FY 2018 – 33,000).
Indicator responsibility Chief Marketing Officer.
8585Annexure A | Technical Indicator Descriptions
Indicator number and title 10. Improved Call Centre responsiveness
Short DefinitionThe average processing times taken to respond to claimant queries received through the Call Centre to be timely.
Purpose/ImportanceImprove the efficiency and effectiveness of RAF services by providing timely response to questions, queries and information requests to RAF stakeholders received through the Call Centre.
Source/Collection of data Call Centre system.
Method of calculationNumber of received calls vs. number of abandoned calls.
Improved turnaround times on e-mails.
Data limitations None.
Type of indicator Activity.
Calculation type Quantitative.
Reporting cycle Quarterly.
New indicator Yes.
Desired performanceImprovement on the average processing time taken to respond to claimant queries received through e-mails and telephone.
Indicator responsibility Chief Marketing Officer.
86 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 11. Improve customer satisfaction (incl. brand awareness)
Short DefinitionImprove the customer satisfaction experience, responsiveness and awareness of the RAF brand to all the Fund’s stakeholders.
Purpose/Importance Improve customer satisfaction, experience and responsiveness.
Source/Collection of data Brand awareness survey reports.
Method of calculation % of brand awareness and improvements.
Data limitations None.
Type of indicator Output.
Calculation type Qualitative.
Reporting cycle Annually.
New indicator Yes.
Desired performance % improvement in the awareness of the RAF brand.
Indicator responsibility Chief Marketing Officer.
8787Annexure A | Technical Indicator Descriptions
Objective 3: Initiatives aligned to the strategic outcome of effective financial management
Indicator number and title 12. Effective cash flow management
Short Definition Manage cash flow in order to reduce the number of claims awaiting payments.
Purpose/ImportanceManage claims-related payments in accordance with approved cash management proce-dures.
Source/Collection of data SAP financial system and Cash Management Strategy.
Method of calculation
One Funding model report to reflect the Fund’s financial position with respect to the claims liability. (i.e. actuarial forecasting of the Fund’s liability).
Compliance to the approved cash management procedures/strategy in relation to claims payment prioritisation taking into account the financial cash constraints.
Data limitations None.
Type of indicator Activity.
Calculation type Qualitative.
Reporting cycle Quarterly.
New indicator Yes.
Desired performanceTimely payment of claims payments requested, but not paid. Claims awaiting payment paid in accordance with cash management procedures/strategy.
Indicator responsibility Chief Financial Officer.
88 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 13. Provision for claims incurred assessed quarterly
Short Definition
To have accurate and updated assessments of outstanding liability so as to determine long-term income requirements and manage sustainability. An actuarial valuation depicts the Fund’s liability of all registered claims that still need to be processed, i.e. the number of open claims.
Purpose/ImportanceTo have updated accurate evaluations of outstanding liability to improve the accounting and actuarial evaluation of the Fund.
Source/Collection of data Internal (RAF) actuarial report and an annual independent statutory actuarial report.
Method of calculation Actuarial claims evaluation method to determine outstanding claims provision.
Data limitationsInaccurate and incomplete claims data, but an audit of the claims data is undertaken annually to maintain and update claims data.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Quarterly.
New indicator No.
Desired performanceAn annual assessment of the provision for outstanding claims by statutory actuary and inde-pendent peer review.
Indicator responsibility Chief Financial Officer.
8989Annexure A | Technical Indicator Descriptions
Indicator number and title 14. Improve procurement outcomes
Short Definition Enhance the overall effectiveness of the procurement systems.
Purpose/ImportanceTo ensure that the RAF obtains value for money in the procurement of goods and services, ensure compliance to SCM processes and improve service delivery to both internal and exter-nal stakeholders/vendors.
Source/Collection of data SAP/procurement database/tender register.
Method of calculation
Calculate the number of days taken to finalise issued tenders (with the exclusion of tenders > R10m and complex tenders, however applicable to all standard tenders) from closing date of tender to the awarding date.
Not more than 10% of all tenders issued should fail/be cancelled as a result of a breakdown and/or weaknesses in controls within the Procurement Department (% with the exclusion of items beyond SCM control such as breach of policy and processes). The target will be calculat-ed from all tenders issued and still open on the 1st of April 2015.
Data limitations None.
Type of indicator Activity.
Calculation type Non-cumulative.
Reporting cycle Quarterly.
New indicator Yes.
Desired performance Effective and efficient procurement services.
Indicator responsibility Chief Financial Officer.
90 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 15. Increase percentage of B-BBEE-rated suppliers
Short Definition Develop and implement B-BBEE policy and plan, with youth and women prioritised.
Purpose/ImportanceTo contribute to Government’s socio-economic goals of redressing economic imbalances caused by unfair discrimination.
Source/Collection of data B-BBEE Policy and Plan and SAP Procurement.
Method of calculationTotal procurement spent on Blacks, women and youth divided by the total amount of pro-curement multiplied by 100.
Data limitations None.
Type of indicator Activity.
Calculation type Quantitative.
Reporting cycle Annually.
New indicator Yes.
Desired performance B-BBEE Policy and Plan prioritising Blacks, women and youth signed off.
Indicator responsibility Chief Financial Officer.
9191Annexure A | Technical Indicator Descriptions
Indicator number and title 16. Implement Enterprise Supplier Development (ESD) initiatives
Short DefinitionAnnual value of all Enterprise Supplier Development contributions and sector-specific pro-grammes made by the Fund as a percentage of the target.
Purpose/ImportanceTo contribute to Government’s socio-economic goals of redressing economic imbalances caused by unfair discrimination.
Source/Collection of data Enterprise Supplier Development spend report.
Method of calculation An approved Enterprise and Supplier Development Plan.
Data limitations None.
Type of indicator Activity.
Calculation type Quantitative.
Reporting cycle Annual.
New indicator Yes.
Desired performance 0.1% of the allocated budget /discretional spend on enterprise development.
Indicator responsibility Chief Financial Officer.
92 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Objective 4: Initiatives aligned to the strategic outcome of optimising ICT functionality
Indicator number and title 17. Ensure optimal ICT service availability
Short DefinitionEnsure ICT services’ availability during official hours and improved network performance on all applications.
Purpose/ImportanceTo manage the ICT service availability in order to achieve ICT service availability to improve productivity.
Source/Collection of data System monitoring tools or manually generated reports.
Method of calculationReports calculating percentage of ICT service availability and network performance reports for all applications.
Data limitations Manual count.
Type of indicator Activity.
Calculation type Quantitative.
Reporting cycle Monthly.
New indicator No.
Desired performance 98% ICT services’ availability.
Indicator responsibility Chief Information Officer.
9393Annexure A | Technical Indicator Descriptions
Indicator number and title 18. Implement Five-year ICT Strategy (e-Enablement Strategy)
Short DefinitionModernisation of the ICT system incorporating the ICT infrastructure requirements as set out in the Five-year ICT Strategic Plan. The transformation strategy will cover the modernisation of the database, application and presentation layers, as well as system integration.
Purpose/ImportanceTo enhance service delivery environment, i.e. efficient processing of claims, and an internal control environment.
Source/Collection of dataPrevious changes requested by business, previous audit findings, workshop with stakehold-ers.
Method of calculationAchievement of milestones as set out in the project plan developed to implement the trans-formation strategy within set timelines.
Data limitations None.
Type of indicator Outcome.
Calculation type Non-cumulative.
Reporting cycle Quarterly.
New indicator Yes.
Desired performance
Sign-off of the ICT Transformation Strategy and Plan and an enhanced service delivery envi-ronment.
Go live.
Indicator responsibility Chief Information Officer.
94 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Objective 5: Initiatives aligned to the strategic outcome of improving people management
Indicator number and title 19. Optimise organisational performance
Short Definition Enhanced organisational performance outcomes for both core and support functions.
Purpose/Importance To effectively fulfil the RAF mandate in accordance with its vision, mission and values.
Source/Collection of data RAF performance management processes and systems.
Method of calculationNumber of performance contracts and assessments completed on the system on a quarterly and annual basis.
Data limitations None.
Type of indicator Outcome.
Calculation type Non-cumulative.
Reporting cycle Annual.
New indicator Yes.
Desired performance RAF performance management system optimised and automated.
Indicator responsibility Chief Human Capital Officer.
9595Annexure A | Technical Indicator Descriptions
Indicator number and title 20. Conduct skills assessment and develop skills strategy
Short DefinitionConduct skills assessment to determine RAF skills needs and identify the skills gaps and de-velop Skills Development Strategy to put initiatives in place in order to address the identified gaps.
Purpose/ImportanceSkills assessment will assist the RAF to determine the skills necessary to fulfil its mandate and identify gaps to be addressed through its Skills Strategy with the aim of increasing productiv-ity.
Source/Collection of data Skills Assessment Report and Skills Development Strategy.
Method of calculationNumber of activities achieved in relation to those planned. For the target to be achieved, all milestones set out in the Skills Development Strategy/Plan for the financial year 2015/16 should be completed.
Data limitations Accuracy of information reported.
Type of indicator Outcome.
Calculation type Non-cumulative.
Reporting cycle Annually.
New indicator Yes.
Desired performance Skills Assessment Report and Skills Development Strategy signed off.
Indicator responsibility Chief Human Capital Officer.
96 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 21. Maintain the RAF’s contribution towards Government’s social and economic development
Short Definition
RAF to develop the Gender Policy in support of Government’s social and economic transfor-mation agenda.
To maintain and monitor the Fund’s compliance to key categories of Employment Equity (EE) targets.
Purpose/Importance
The implementation of the Gender Policy will give effect to the equal enjoyment of all rights and freedom by every person; the promotion of equality, specifically gender equality; and the values of non-racism and non-sexism contained in section 1 of the Constitution.
To ensure that the Fund meets the overall national EE targets as required in the National Economic Active Population (NEAP) targets /RAF Board-specific targets through targeted HR programmes.
Source/Collection of dataGender Policy and Gender Equality Enhancement Plan.
NEAP targets from the Department of Labour and SAP HR employee data records.
Method of calculation
Gender Equity Advancement Plan outcomes in relation to achievements. For the target to be achieved, all milestones set out in the Enhancement Plan should be completed.
Total number of female employees divided by the total number of employees in Manage-ment multiplied by 100.
Data limitations None.
Type of indicator Outcome.
Calculation type Quantitative.
Reporting cycle Annual.
New indicator No.
Desired performance
Compliance to Gender Equality Advancement Plan.
Compliance to EE targets with no more than 10% positive or negative variance on each EE category as per the NEAP targets.
Indicator responsibility Chief Human Capital Officer.
9797Annexure A | Technical Indicator Descriptions
Indicator number and title 22. Manage absenteeism
Short DefinitionAbsenteeism has a potential of negatively impacting on productivity, work quality, morale and customer service and satisfaction.
Purpose/Importance To manage absenteeism with the aim of increasing productivity.
Source/Collection of data HR Exco dashboard.
Method of calculationThe average number of absent days taken per employee is calculated based on total sick leave days divided by the number of employees in that month or quarter.
Data limitations Accuracy of information.
Type of indicator Outcome.
Calculation type Non-cumulative.
Reporting cycle Annual.
New indicator Yes.
Desired performanceNumber of employees’ wellness interventions and initiatives to reduce absenteeism. Monitor, manage and report on absenteeism trends.
Indicator responsibility Chief Human Capital Officer.
98 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Objective 6: Initiatives aligned to the strategic outcome of administrative dispensation aligned to the RABS Bill
Indicator number and title 23. Transitioning RAF to RABS
Short DefinitionTransitioning of the RAF from a ‘fault-based’ to a ‘no-fault’ based benefit scheme, i.e. the Road Accident Benefit Scheme.
Purpose/Importance
The transformation will address many of the challenges facing the Fund that are constrain-ing its ability to deliver on its mandate in an effective and efficient manner. In addition, a ‘no-fault’, fixed benefit scheme will ensure smooth alignment with the Comprehensive Social Security System (CSSS) envisaged by Government.
Source/Collection of dataRoad Accident Fund reports from the appointed service provider.
Resolutions from committee meetings.
Method of calculation
Reports received on recommended funding model.
Inputs from the committee members and other stakeholders consolidated.
Recommendations submitted to the DoT and National Treasury of the proposed RABS fund-ing model.
Data limitations None.
Type of indicator Output.
Calculation type Non-cumulative.
Reporting cycle Annual.
New indicator Yes.
Desired performance Monitor compliance to the RABS project plan.
Indicator responsibility Chief Strategy Officer.
9999Annexure A | Technical Indicator Descriptions
Objective 7: Initiatives aligned to the strategic outcome of an assured control environment
Indicator number and title 24. Raise ethical standards
Short Definition
Raise the standards through which we adhere to our commitments, display honesty and integrity and reaching the organisation’s goals through honourable conduct.
Integrating the RAF’s ethical standards requires the RAF and all who act on its behalf to con-duct their business in a manner consistent with the RAF’s ethical standards.
Purpose/ImportanceTo provide assurance on the achievement of ethics objectives, the outcomes of ethics initia-tives and the quality of the organisation’s ethics performance.
Source/Collection of data Ethics Awareness Implementation Plan and Report.
Method of calculationResults on the review of the design, implementation and effectiveness of the organisation’s ethics-related objectives, programmes and activities.
Data limitations None.
Type of indicator Outcome.
Calculation type Non-cumulative.
Reporting cycle Annual.
New indicator Yes.
Desired performance 100% implementation of ethics awareness initiatives and 100% annual declaration.
Indicator responsibility Executive Corporate Secretary.
100 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Indicator number and title 25. Increased % of fraud detected before undue payments are made
Short Definition
Improve fraud detection and management tools before undue payments are made. The FID will develop and establish Cyber and Data Specialists capacity. The objective is to identify trends and patterns of fraud and corruption using the latest ICT. This will contribute to the reduction of undue payments to disentitled claimants and savings made to the Fund due to repudiations of claims submitted.
Purpose/ImportanceAn improved fraud detection and management process will protect customer and RAF infor-mation and assets, whilst enabling a high-performance environment.
Source/Collection of data Fraud management information systems.
Method of calculation Number of fraud cases detected before compensation.
Data limitations None.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator Yes.
Desired performanceFraud corruption cases detected before compensation (10% - FY 2016, 15% - FY 2017, 20% - FY 2018).
Indicator responsibility Chief Strategy Officer.
101101Annexure A | Technical Indicator Descriptions
Indicator number and title 26. Contribute to road safety by creating a database that will inform preventative measures
Short Definition
Create a crash database based on the information sourced from the information collection agents that the Fund has partnered with, that possess the capacity and footprint to be present at accident scenes to gather the information on behalf of the Fund. The information gathered will assist the Fund to validate claims registered and expedite the claims process.
Purpose/Importance
The complete and accurate information will result in:
Trend analysis and enable more accurate projections as to the outstanding claims liability in respect of claims incurred but not lodged.
Identification of ‘Hot Spots’ where road safety initiatives can be focused on.
Validation of claims registered and detection of fraudulent claims.
Source/Collection of data External and internal motor vehicle accident statistics.
Method of calculation Report on activities completed as per project plan.
Data limitations None.
Type of indicator Outcome.
Calculation type Cumulative.
Reporting cycle Annual.
New indicator No.
Desired performance Internal crash database.
Indicator responsibility Chief Strategy Officer.
104 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
ANNEXURE B: Funding Model
10.1.1 Funding Model (with the cash injection assumption)Capacity ramp-up 10% 10% 5% 5% 0% 0%
10% 41% 9% 1% 1% 1%
Cash Flow Statement 2015 2016 2017 2018 2019 2020
+Fuel Levy 21 682 820 30 492 246 33 359 741 33 693 338 34 030 272 34 370 574
Fuel Sold (litres) (‘000) 24 570 211 24 815 913 25 064 072 25 314 713 25 567 860 25 823 539
Inflationary fuel levy increase - - - - -
Ad hoc fuel levy increase 50,0 - - - -
Total fuel levy increase 50 - - - -
Total fuel levy (cents per litre) 104,0 154,0 154,0 154,0 154,0 154,0
Gross fuel levy revenue (‘000) 25 087 966 35 280 855 38 598 671 38 984 658 39 374 504 39 768 249
Refunds + Recoupment 3 405 146 4 788 609 5 238 930 5 291 320 5 344 233 5 397 675
Net fuel levy revenue (‘000) 21 682 820 30 492 246 33 359 741 33 693 338 34 030 272 34 370 574
+ Cash Injections
Required injection to meet operational capacity 7 842 594 9 415 867 14 658 669 23 967 641 32 080 598 41 445 681
+ Cash assets at start of year 2 504 775 267 619 211 690 210 292 210 257 210 256
- Expenses paid 1 766 383 1 945 018 2 108 012 2 220 350 2 352 567 2 492 668
Available for claim settlement 22 421 212 28 814 848 31 463 419 31 683 281 31 887 962 32 088 163
Available for claim settlement (allowing for float)
22 221 212 28 614 848 31 263 419 31 483 281 31 687 962 31 888 163
Operational Claims Limit 30 063 806 38 030 715 45 922 088 55 450 921 63 768 560 73 333 844
Claims Financial Shortfall 7 842 594 9 415 867 14 658 669 23 967 641 29 713 491 8 254 270
Claims Paid 22 221 212 28 614 848 31 263 419 31 483 281 31 687 962 31 888 163
Personal Old Act 9 183 840 5 921 772 3 396 502 1 746 744 838 712 374 863
Personal New Act 12 321 314 21 867 291 27 003 450 28 814 358 29 850 414 30 422 744
Supplier 450 363 527 860 524 369 537 545 564 924 602 161
Undertakings 265 694 297 925 339 098 384 633 433 911 488 395
Investment income 67 619 11 690 10 292 10 257 10 256 10 256
Available funds at year-end 267 619 211 690 210 292 210 257 210 256 210 256
105105Annexure B | Funding Model
Income Statement 2015 2016 2017 2018 2019 2020
Income 22 175 823 32 630 007 34 055 588 33 774 291 34 112 034 34 453 155
Fuel levy 22 175 823 32 630 007 34 055 588 33 774 291 34 112 034 34 453 155
Other - - - - - -
Outgo 24 951 845 27 012 325 28 958 855 30 967 097 33 250 870 35 800 796
Claims incurred 23 219 127 25 098 430 26 873 781 28 763 484 30 915 040 33 324 816
Expenses Incurred 1 732 718 1 913 896 2 085 074 2 203 613 2 335 830 2 475 980
Investment profit -7 692 318 -8 448 938 -8 845 873 - 9 203 230 -9 722 726 -10 439 531
Investment income 67 619 11 690 10 292 10 257 10 256 10 256
Unwinding of liability -7 759 938 -8 460 628 -8 856 165 -9 213 487 -9 732 982 -10 449 787
Surplus (Deficit) -10 468 340 -2 831 256 -3 749 139 -6 396 036 -8 861 562 -11 787 172
Values for graph: Claims Paid 2013/4 2014/5 2015/6 2016/7 2017/8 2018/9
Scen 1 21 23 24 24 27 29
Scen 2 21 24 22 24 27 29
Scen 3 21 24 22 24 27 29
Utilisation of claim payment capacity 2013/4 2014/5 2015/6 2016/7 2017/8 2018/9
Claim payment capacity 30,1 38,0 45,9 55,5 63,8 73,3
Claims paid -22,2 -28,6 -31,3 -31,5 -31,7 -31,9
Capacity not utilised 7,8 9,4 14,7 24,0 32,1 41,4
106 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Cashflow statement 2013/4 2014/5 2015/6 2016/7 2017/8 2018/9
Cash at start 2,5 0,3 0,2 0,2 0,2 0,2
Fuel Levy received 21,7 30,5 33,4 33,7 34,0 34,4
Expenses (including capital expenses) -1,8 -1,9 -2,1 -2,2 -2,4 -2,5
Investment Income earned 0,1 0,0 0,0 0,0 0,0 0,0
Claims -22,2 -28,6 -31,3 -31,5 -31,7 -31,9
Cash at end 0,3 0,2 0,2 0,2 0,2 0,2
Values for graph: Cash flow progression Mar 2013
Mar 2014
Mar 2015
Mar 2016
Mar 2017
Mar 2018
Scen 1 6 4 1 0 0 0
Scen 2 6 4 0 0 0 0
Scen 3 6 4 0 0 0 0
Increase in claims liability 2013/4 2014/5 2015/6 2016/7 2017/8 2018/9
Claims liability at start 82,8 97,9 93,4 83,3 65,8 45,0
IBNR (Incurred But Not Reported) 22,5 30,1 32,2 34,0 35,9 38,5
ORC (Outstanding Reported Claims) 60,3 67,8 61,2 49,2 29,9 6,5
Claims liability at end 97,9 93,4 83,3 65,8 45,0 48,7
IBNR (Incurred But Not Reported) 30,1 32,2 34,0 35,9 38,5 41,7
ORC (Outstanding Reported Claims) 67,8 61,2 49,2 29,9 6,5 6,9
Increase in liability 15,1 -4,5 -10,2 -17,5 -20,8 3,6
107107Annexure B | Funding Model
10.1.2 * Explanation of Claims-Related Indicators.
Table claim numbers with limited funding
Claim number overview 2015 2016 2017 2018 2019 2020
Claim Number summary
Number of outstanding Personal claims (In-cluding IBNR)
201 070 197 881 178 390 162 230 149 002 139 987
Number of outstanding Supplier claims (In-cluding IBNR)
108 058 99 276 96 880 96 535 96 747 97 099
Personal claim numbers
ORC
O/S at start 182 901 166 855 173 237 163 344 155 234 150 785
Newly reported 59 884 59 120 59 147 57 600 58 329 57 308
Settled -75 930 -52 738 -69 040 -65 710 -62 777 -58 564
O/S at end 166 855 173 237 163 344 155 234 150 785 149 529
Supplier claim numbers
ORC
O/S at start 15 099 18 816 15 698 14 647 14 344 14 267
Newly reported 103 485 104 000 106 535 104 962 105 053 103 010
Settled -99 768 -107 118 -107 585 -105 265 -105 130 - 103 020
O/S at end 18 816 15 698 14 647 14 344 14 267 14 257
185 671 188 935 177 991 169 578 165 052 163 787
The table below illustrates how the number of open claims continues to increase over the years with a limited fund-ing model taken into account. Limited funding also has an impact on the number of claims settled. Limited funding is based on the expected revenue from the approved fuel levy allocated by National Treasury, excluding ad hoc fuel levy increases referred to in table 10.1.1 above
108 Road Accident Fund | Strategic Plan 2015 – 2020
ANNEXURES
Table claim numbers with full funding
Claim number overview 2015 2016 2017 2018 2019 2020
Claim Number summary
Number of outstanding Personal claims (Including IBNR)
201 070 171 318 138 506 102 485 63 544 23 581
Number of outstanding Supplier claims (Including IBNR)
108 058 99 276 96 880 96 535 96 747 97 099
Personal claim numbers
ORC 170 282 146 983 122 718 94 444 64 206 31 992
O/S at start 182 901 151 466 131 285 108 071 80 101 49 939
Newly reported 59 884 59 120 59 147 57 600 58 329 57 308
Settled -91 319 -79 301 -82 361 -85 570 -88 491 -89 512
O/S at end 151466 131 285 108 071 80 101 49 939 17 735
Supplier claim numbers
ORC
O/S at start 15 099 18 816 15 698 14 647 14 344 14 267
Newly reported 103 485 104 000 106 535 104 962 105 053 103 010
Settled -99 768 -107 118 -107 585 -105 265 -105 130 -103 020
O/S at end 18 816 15 698 14 647 14 344 14 267 14 257
Total Number of claims Settled -191 087 -186 420 -189 947 -190 836 -193 621 -192 532
Closing Balance at the End 170 282 146 983 122 718 94444 64 206 31 992
* The table below illustrates how the number of open claims can be reduced with adequate funding. This performance indicator seeks to reflect the number of claims that can be finalised with the assumed levels of productivity within the operations environment despite the financial constraints.Adequate funding refers to the cash injection (includes the 8c/L ad hoc fuel levy increase) that matches the productivity levels and places the organisation in a position to meet all claim-related liabilties as they become due.