RAF 2016 2020 Strategic Plan and 201617 Annual

RAF 2016 -2020 Strategic Plan and 2016/17 Annual Performance Plan April 2016 Presented by: Dr. Eugene Watson (CEO)

Purpose • The purpose of this presentation is to present the RAF’s 2016 -2020 Strategic Plan and 2016/2017 Annual Performance Plan (APP) › › Where the business has come from… v Mandate v Operational context v Previous Performance – 2014/15 Highlights v Benefits realised from the Strategic Plan Where the business is going… v Mission, vision and values v Strategic Objectives, Structure and Targets v Key changes to the RAF 2015 -2020 Strategic Plan › Alignment to the National Development Plan, 9 Point Plan (MTSF) and Radical Economic Transformation… › Financial projections…

Where the business has come from…

Where the business has come from… RAF Mandate • Road Accident Fund Act, 1996 (Act No. 56 of 1996) & RAF Amendment Act, 2005 (Act No. 19 of 2005) › “Payment of compensation in accordance with this Act for loss or damage wrongfully caused by the driving of a motor vehicle” › Provide compulsory cover to all users of South African roads against injuries sustained or death arising from accidents involving motor vehicles within the borders of South Africa • National public entity (Schedule 3 A of the PFMA) • Constitutional Court rulings and legal precedents have shaped the mandate • The Fund is called on to: › Provide a social security safety net › Indemnify, rehabilitate and compensate the injured › Promote the safe use of all South African roads

Where the business has come from… Operational Context Legacy Design challenges - 70 year compensation regime - Insolvent since 1981 - Divergent income and expenditure - Fault-based compensation system, with significant exclusions - Subjective, legalistic, prolonged and expensive administration - Comprehensive Social Security policy expanding beyond design - Business of law and adversarial engagement - Poorly run business - Moved from protecting a wrongdoer to supporting victims Recognition Business Challenges - 3 rd Clean Audit Award - 2 nd Annual Transport Awards: - Integrated Reporting Award - Institute of Internal Auditors Award - Claims expenditure exceeds income - Creditors book increasing (RNYP) - Institute of Risk Managers Award - Business Women Award - Bronze in the #BCTWF - >80% of APP targets achieved - Increasing average value of a claim - Increase in value of legal costs - Increasing number of writs and business disruptions - Fraud prevention and detection

Where the business has come from… 2014/15 Highlights 173, 743 New claims registered – 18% Revenue increased by 11% to R 22, 7 billion Claims expenditure grew by 26% to R 28 billion 242, 869 Individual payments – 15% 23, 828 General damages payments – 10% RAF CHALLENGES Cash expenditure exceeded the net fuel Levy by R 5. 4 billion (24%) 9, 769 Funeral payments – 28% RAF RECOGNITION 117, 822 Medical payments – 14% 21, 995 Income support payments – 18% Open claims decreased from 198, 140 to 179, 778 – 9%

Where the business has come from… Benefits realised from the Strategic Plan Achievements Key Performance Indicator 2015/16 (Q 3) 2014/15 2013/14 2012/13 2011/12 Achievement of KPI’s 62% 84% 83% 54% Number of open claims (O, R, S) 235 228 217 710 232 285 279 912 264 579 Average of open claims 1058 1 450 Not scheduled % of claims verified within 60 days 93, 46% 65% Not scheduled % of direct claims originated 32, 68% 30, 32% 27% 23% 15% Reduction in legal costs 12, 39% 19, 47% 22, 12% 27% 29% Reduced % of direct claims converted No Information 3, 28% 3, 90% Baseline set No Information % of direct claims settled 28, 55% 27, 93% 25, 25% Baseline set No Information % reduction in of writs of execution 85, 8% increase 69, 07% increase 28, 6% reduction 32% reduction No Information

Where the business has come from… Benefits realised from the Strategic Plan Key Performance Indicator Achievements 2015/16 (Q 3) 2014/15 2013/14 2012/13 2011/12 % reduction in litigated cases No Information 28. 95% reduction 18. 36% 14% No Information Turnaround times for simple claims No Information 193 days 238 days 249 No Information 2 217 1 406 1 351 1 336 No Information Turnaround times for complex claims Number of HSC’s and CSC’s Net deficit Number of fraud convictions Number of claimants engaged at ROTR Reduction in the vacancy rate Employment Equity % of B-BBEE- rated suppliers No Information 96 HSC’s and 5 CSC’s 83 HSCs 75 HSC’s 52 R 139 billion R 110 billion R 90. 798 billion R 73. 502 billion R 46. 4 billion 195 627 379 234 No Information 30 520 27, 880 20, 490 13 155 No Information 6. 96% 9. 9% 14% No Information 90% 90% 82% 75% 113% 100% 89% 60%

Where the business is going…

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

Where the business is going… Strategic Objectives, Structure and Targets Efficient Claims Processing COO • Manage the number of open claims (open claims excluding RNYP) • Reduce the average of open claim • Increase % of claims verified by objecting in 60 days • % increase direct claims originated • Increased number of direct claims settled as a % of total personal claims settled • Reduction in legal costs • Implement Post-Crash Care Strategy (Pillar 6) Accessible Services Effective Financial Management Optimal ICT Services CMO CFO CIO • Increase accessibility to RAF services • Increase the number of claimants engaged at RAF events (Ro. TR) and other events • Improved Call Centre responsiveness • Improve customer satisfaction (incl. brand awareness) • Effective cash flow management • Provision for claims incurred assessed quarterly • Improve procurement outcomes • Increase % of BBEE rated suppliers • Implement Enterprise Supplier Development (ESD) initiatives. • Ensure optimal ICT availability • Implement and assess benefit of the 5 -year ICT Strategy (E- Enablement Strategy)

Where the business is going… Strategic Objectives, Structure and Targets Improved People Management CHCO • Optimise organisational performance • Improved workforce skills and placement for current and future requirements • RAF’s contribution towards Government’s social and economic transformation agenda • Manage absenteeism Administrative dispensation aligned to the RABS Bill CSO • Transitioning RAF to RABS Assured Control environment CSO Cosec • Raise ethical standards • Increase % of fraud detected before undue payment is made • Contribute to road safety by creating a crash verification system (CVS) and a report that will inform preventative measures

Where the business is going… Key changes to the 2015 -2020 Strategic Plan Amendments Objective Efficient Claims Processing v Changes in the financial model necessitated a moderation of the Optimising ICT v Added a target to measure the benefits and value realisation of the functionality RABS Bill Assured Control Environment Target Maturation number of open claims ICT E-enablement Strategy Plans v The target now focuses on transitioning RAF to RABS v The funding model was developed and submitted for approval v Do. T recommended that RAF change the indicator from Crash database to Crash Verification System (CVS) v Turn around times, claim verifications, undertaking administration, access to surveys, call centre responsiveness, cash flow strategy, absenteeism, and improved ethical standards

Alignment to NDP, 9 Point Plan (MTSF) and Radical Economic Transformation…

Alignment to NDP, 9 Point Plan (MTSF) and Radical Economic Transformation … NDP Focus Area Economic NINE POINT PLAN RAF Outcome Behavioural change to reduce Indicators environmental, social and economic cost of infrastructure Encouraging private sector #RAFOn. The Road investment Road safety initiatives with GP, MP & road crashes KZN Where infrastructure is available, households can often not afford public Increase accessibility to RAF services (Call Centre responsiveness & offices) transport fares to access basic needs Health care for Reduce injury, accidents and violence by 50% from 2010 levels all Social protection Implement Post-Crash Care Strategy (Pillar 6) State delivery & financing of health care Medical spend & undertakings Coverage of existing social security benefits State reforms to help identify Participate and support the Reform social welfare bottlenecks, remove transformation of RAF into RABS administrative barriers, reduce RABS regulatory inefficiencies… Building a Make the public service career of choice capable and Develop technical and specialist developmental State Improved performance management outcomes professional skills Skills assessment and Strategy Strengthen delegation, accountability and Maintain EE targets oversight Manage absenteeism The developmental potential of SOE’s Implement gender policy

Alignment to NDP, 9 Point Plan (MTSF) and Radical Economic Transformation … NDP NINE POINT PLAN Focus Area Outcome Fighting corruption A corruption-free society, a high RAF Indicators Moderating workplace conflict adherence to ethics throughout Raise ethical standards Improve fraud detection and society and a government that is management accountable to its people Improve internal controls Develop and implement B-BBEE Nation building and A society where opportunity is not social cohesion determined by race or birth right; cooperatives, townships and rural policy and plan, with youth and where citizens accept that they enterprises woman prioritised have both rights and responsibilities State reform and boosting the role Major companies must meet targets of state-owned companies, and on elements of B-BBEE transport infrastructure A united , prosperous, non-racial, non-sexist and democratic South Africa Unlocking the potential of SMMEs, Increase number of B-BBEE rated suppliers B-BBEE and ESD Plans

Financial Projections…

Financial Projections… Assumptions Revenue • Net fuel sales are estimated to increase at a constant rate of 1% (comprising GDP at 2% – less 1% to allow for improvement in fuel efficiency) • The fuel levy remained at current levels of R 1, 54 c after a 0’cent per litre increase • 93% of the fuel levy will be utilised to pay claims and claims-related expenditure • Where productivity exceeds available cash, claims expenditure will be limited to cash Administration • Consumer Price Index (CPI) plus an increase relating to initiatives being put in place to improve the business (range of 7. 2 -5. 0%) • 7% of revenue to be spent on Administration, Staff & Capex costs Personnel costs • Estimated rate of 8% relating to cost of living adjustments Provision for claims incurred • Increases annually because the number of claims reported is expected to remain high

Financial Projections… Budget

Financial Projections… Claim Number Movement

Strategic Challenges…

Strategic Challenges and Mitigations • Inadequate Funding › Impact: Claims processing slows, writs and legal costs increasing, morale affected and changing satisfaction › Mitigation: Requested and request additional funding; and stringent cash flow management is required • Continuation of the RAF dispensation and the delayed introduction of RABS › Impact: Liability grows, inequity persists, health benefits remain unevenly spread, and expenditure continues to be directed away from claimants › Mitigation: Wind RAF scheme of arrangement down and support DOT as required with the RABS Bill

Conclusion…

Conclusion • The 2016 -2020 Strategic Plan and the 2016/2017 APP are focused on medium-term performance and delivery, while preparing for the future with a keen emphasis on: › Processing more claims and doing so in less time › Managing cash flows strictly › Ensuring good governance and management of the business • Great effort is and will be placed on: › Fulfilling the Strategic Plan and APP deliverables; › Addressing the challenges and risks; › Preventing the catastrophic socio-economic effects of accidents in our society; and › Supporting the transition to RABS.

Conclusion

Thank you

Reference Slides…. . Ø RAF Transformation Ø RAF Organisational Structure Ø Cash Flow statement and Balance Sheet Ø Medium-term Targets

Transformation

Transformation

Structure

Cash Flow Statement

Statement of Financial Position

2016/17 – 2018/19 Medium Term Targets

2016/17 – 2018/19 Medium Term Targets

2016/17 – 2018/19 Medium Term Targets

2016/17 – 2018/19 Medium Term Targets

2016/17 – 2018/19 Medium Term Targets