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Strategic Plan

2015-2020

Road Accident Fund | Strategic Plan 2015 – 2016

1Road Accident Fund | Strategic Plan 2015 – 2016

SECTION 1

INTRODUCTION

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


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


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


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


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


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


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


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

STRATEGIC OVERVIEW

PART A


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


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.


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


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.


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


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.


Regulatory Revision

Pending Court Cases


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


Regulatory Revision

Pending Court Cases


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.


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


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


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


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.


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


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.


• 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


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.


Chapter 14, par 14.29, p.356.


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


Chapter 12, par 12.127, p. 307.


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


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.


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


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


• 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


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-


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


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.


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


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.


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

STRATEGIC OBJECTIVES OF THE FUND

PART B


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)


To ensure all strategic objectives of the Fund are achieved, business support functions should be effective in enabling the Fund to achieve its objectives.


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


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


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


8.1.4 Optimal ICT Funtionality

8.1.5 Improve People Management



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


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


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.


8.1.6 Administrative Dispensation Aligned to the RABS Bill

8.1.7 Assured Control Environment


Transition the RAF to the RABS by developing the RABS business architecture of the future organisa-tion, as well as the RAF Funding Model.


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


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


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


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


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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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


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-


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.


PART C

LINKS TO OTHER PLANS


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.


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.


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


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)


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.


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 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




PFMA Reference Description Materiality/ Significance

(e) Commencement or cessa-tion of a significant business activity


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


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.


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.


ANNEXURE A

TECHNICAL INDICATOR DESCRIPTIONS


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.


Method of calculationAverage age of all open files at reporting date, i.e. difference between “registered on” and reporting date.

Data limitations None.


Calculation type Quantitative.


New indicator Yes.

Desired performance Identify long outstanding claims to reduce the average age of open claims.



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.


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.





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 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.


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.





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.



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.



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.





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 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.


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.




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%).



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.


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).



Calculation type Non-Cumulative.

Reporting cycle Annually.

New indicator Yes.

Desired performance Operationalised post-care strategy.

Indicator responsibility Chief Operating Officer.


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.



New indicator Yes.

Desired performance Increased number of access points to RAF services.

Indicator responsibility Chief Marketing Officer.


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.





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 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.


Type of indicator Activity.


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.



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.



Calculation type Qualitative.


New indicator Yes.

Desired performance % improvement in the awareness of the RAF brand.



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.


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.



Calculation type Qualitative.


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.


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.




New indicator No.

Desired performanceAn annual assessment of the provision for outstanding claims by statutory actuary and inde-pendent peer review.



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.


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.



Calculation type Non-cumulative.


New indicator Yes.

Desired performance Effective and efficient procurement services.



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.





New indicator Yes.

Desired performance B-BBEE Policy and Plan prioritising Blacks, women and youth signed off.



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.





New indicator Yes.

Desired performance 0.1% of the allocated budget /discretional spend on enterprise development.



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.




Reporting cycle Monthly.

New indicator No.

Desired performance 98% ICT services’ availability.

Indicator responsibility Chief Information Officer.


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.





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.


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.





New indicator Yes.

Desired performance RAF performance management system optimised and automated.

Indicator responsibility Chief Human Capital Officer.


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.




New indicator Yes.

Desired performance Skills Assessment Report and Skills Development Strategy signed off.



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.


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.





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 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.




New indicator Yes.

Desired performanceNumber of employees’ wellness interventions and initiatives to reduce absenteeism. Monitor, manage and report on absenteeism trends.



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.


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.





New indicator Yes.

Desired performance Monitor compliance to the RABS project plan.

Indicator responsibility Chief Strategy Officer.


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.





New indicator Yes.

Desired performance 100% implementation of ethics awareness initiatives and 100% annual declaration.

Indicator responsibility Executive Corporate Secretary.


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.





New indicator Yes.

Desired performanceFraud corruption cases detected before compensation (10% - FY 2016, 15% - FY 2017, 20% - FY 2018).



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.





New indicator No.

Desired performance Internal crash database.



ANNEXURE B

FUNDING MODEL


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


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


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


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.


Table claim numbers with full funding

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