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17 April 2015 PowerPoint Presentation
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17 April 2015

17 April 2015

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17 April 2015

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  1. PORTFOLIO COMMITTEE ON TRANSPORT RAF 2016-2020 Strategic and 2015/2016 Annual Performance Plan (APP) 17 April 2015

  2. Purpose • The purpose of this presentation is to present the RAF’s 2016-2020 Strategic and 2015/2016 Annual Performance Plan (APP) • The presentation covers the following: • Where the business has come from… • Where the business is going… • Alignment to the National Development Plan… • Financial projections… • Challenges and mitigation measures…

  3. Where the business has come from… The legacy • 70 year funding regime driven by an “accessible” revenue stream • Moved from protecting a wrongdoer from being sued to supporting crash victims • RAF Fuel levy is large but insufficient to address the statutory obligations • Compensation is “fault-based” and fault must be proven or excluded • Significant compliance burden • Material dependence on external parties • Great deal of subjectivity and Court rulings are not always consistent • Many continue to be excluded, especially those who had no income to lose • Micro-economy of intermediaries is sustained by the RAF • Half of all matters on the Court roll are allegedly related to road accidents • Claimants are often not the primary beneficiary and compensation is not always used for rehabilitatiion

  4. Where the business has come from…

  5. Where the business is going… • Appropriate cover to road users in SA; Rehabilitate persons injured, compensate for injuries or death and indemnify wrongdoers, in a caring and sustainable manner; and Support safe use of our roads RAF Vision RAF Values • To provide world class care to road accident victims to restore balance in the social system • Ubuntu • Solution Focused • Efficiency • Pride in what we do • Excellence RAF Mission Vision, Mission and Values

  6. Where the business is going… Strategic Objectives • Effectively manage the number of open claims Reduce the average age of open claims • Increase number of claims verified by objecting to or accepting within 60 days • Percentage increase direct claims origination • Increased percentage of direct claims settled • Reduction in legal costs • Implement Post-Crash Care Strategy (Pillar 6) • Increase accessibility to RAF services • Increase the number of claimants engaged at RAF events (RoTR) and other events • Improved Call Centre responsiveness • Improve customer satisfaction (incl. brand awareness) • Cash Flow Management (reduce number of claims awaiting payment) • Provision for claims incurred assessed quarterly • Improve procurement outcomes • Increase percentage of B-BEE rated supplier • Implement Enterprise Supplier Development (ESD) initiatives. • Raise ethical standards • Increase %of fraud detected before undue payment is made. • Contribute to road safety by creating a database and use to implement preventative measures • Optimise organisational performance • Improved workforce skills and placement for current and future requirements • RAF’s contribution towards Government’s social and economic transformation agenda • Manage absenteeism • Ensure optimal ICT service availability • Implement the 5 year ICT strategy (E Enablement strategy) • Development and approval of RABS funding / financial model. • A legislative dispensation aligned to principles of social security; Effectively manage the Fund's finances & pursue sustainability; A customer-centric, operationally effective & efficient RAF; A transformed & capacitated RAF

  7. Alignment to NDP… Strategy alignment to the National Development Plan

  8. Financial Projections… Assumptions – 8c/litre • Revenue • Net fuel sales are estimated to increase at a constant rate of 1% (comprising GDP at 2% – less 1% to allow for improvement in fuel efficiency) • The fuel levy is estimated to increase at 8 cents per annum • 92% of the fuel levy will be utilised to pay claims and claims related expenditure • Where productivity exceeds available cash, the claims expenditure will be limited • Available cash is a material constraint • Administration • Consumer Price Index (CPI) (5-5.6%) plus an increase relating to initiatives being put in place to improve productivity in the claims environment • Personnel costs • Estimated rate of 8% relating to cost of living • Provision for claims incurred • Reduces due to an increase in claims processing but accounts payable increases by the amount that cannot be paid due to shortage of cash.

  9. Financial Projections… Assumptions – 8c/litre • Claims Expenditure(15% in expenditure and 10%, 10%, 5% and 5% for productivity) • The table below illustrates how the number of open claims continues to increase over the years when limited funding is taken into account. Limited funding is based on the expected revenue from the approved fuel levy allocated by National Treasury excluding unplanned fuel levy increases.

  10. Financial Projections… Assumptions – 8c/litre

  11. Financial Projections… Assumptions – Once-off 50c/litre • Revenue • Net fuel sales are estimated to increase at a constant rate of 1% (comprising GDP at 2% – less 1% to allow for improvement in fuel efficiency) • The fuel levy is estimated to increase at 50 cents in 2015/16 and no increase thereafter. • 94% of the fuel levy will be utilised to pay claims and claims related expenditure • Productivity will not be increased and will remain constant, extra cash received reduces the amount by which accounts payable increase. • Where productivity exceeds available cash, the claims expenditure will be limited • Available cash is a material constraint • Administration • Consumer Price Index (CPI) (5-5.6%) plus an increase relating to initiatives being put in place to improve productivity in the claims environment • Personnel costs • Estimated rate of 8% relating to cost of living • Provision for claims incurred • Reduces due to an increase in claims processing but accounts payable increases with the amount that cannot be paid due to the shortage of cash.

  12. Financial Projections… Assumptions – Once-off 50c/litre • Claims Expenditure (15% in expenditure and 10%, 0%, 0% and 0% for productivity) • The table below illustrates how the number of open claims continues to increase over the years when limited funding is taken into account. Limited funding is based on the expected revenue from the approved fuel levy allocated by National Treasury excluding unplanned fuel levy increases.

  13. Financial Projections… Assumptions – Once-off 50c/litre

  14. Key Challenges and mitigation measures… Fundamental Challenges • Adequate funding • Funding not associated with claim frequencies and costs • Beneficiary base not constituted by past, present or future contributors • Benefits are not defined and in some instances are not limited to a maximum value • Will curtail operational performance and increase costs. • Additional funding is required • Claims expenditure • Claim payments exceed income as a result of productivity improvements • Provision for claims incurred has grown faster than CPI • Claim values have increased as a result of the Amendment Act which excludes minor injuries, as well as market forces aimed at higher value ‘pay-outs’ • Curtail claim processing (number and value) • Adversarial ‘fault-based’ compensation system • Restricted access, long settlement periods and spiralling costs • Multiple, complex and legalistic hurdles • Inefficiency is incentivised, as RAF ‘carries all tabs’ • “No fault” legislation – namely: RABS

  15. Conclusion • The 2015/2016 APP and 2015-2020 Strategic Plans are focused on medium term performance and delivery, while preparing for the future. • Great effort is and will be placed on: • Fulfilling the APP and Strategic plan deliverables • Addressing the challenges and risks • Preventing the catastrophic socio-economic effects of accidents in our society

  16. Thank you

  17. Where the business is going… 2015 – 2017 Medium Term Targets

  18. Where the business is going… 2015 – 2017 Medium Term Targets

  19. Where the business is going… 2015 – 2017 Medium Term Targets

  20. Where the business is going… 2015 – 2017 Medium Term Targets

  21. Where the business is going… 2015 – 2017 Medium Term Targets