ROAD ACCIDENT FUND Presentation of the RAF 2007

ROAD ACCIDENT FUND Presentation of the RAF 2007 Annual Report to the Portfolio Committee on Transport 17 October 2007 1

CONTENTS • Highlights • Review of operations • Performance against objectives • Financial statements 2

HIGHLIGHTS Fuel Levy Income grows 26. 3% Net Claims finalised increase 38. 6% Claims backlog drops 23. 5% Compensation paid rises 28. 5% Cost to compensation ratio improves 8. 3% Cash holdings at year-end R 2, 4 billion 3

HIGHLIGHTS Despite this … Outstanding claims liability grows 11. 8% to R 23. 9 billion Resulting in… Deficit rising 9. 8%% to R 20. 2 billion 4

ENVIROMENTAL FACTORS ECONOMIC • Economic growth – 5% • Growth in vehicle population – 7. 2% (8. 5 m vehicles) • Increase in distance travelled – 2. 1% (128. 1 million vehicle kilometres) • Increase in road fatalities – 8. 9% (15 393) • Foreign visitors – 8. 5 million (1996) REGULATORY • NO CHANGE RAF Amendment Act remains elusive ! 5

Losing battle ? 6

ECONOMIC CHOICES Constraints … Poor capital base (Grossly undercapitalised) Fuel levy too low to address the legacy SARS Fuel collection reduces cash receipts by R 1 billion Choices… Clearing the backlog vs Building reserves/ appropriate capital base 7

KEY FACTS South African vehicle population * Source: Road Traffic Management Corporation 8

KEY FACTS Vehicle accidents with fatalities in South Africa * Source: Road Traffic Management Corporation 9

KEY FACTS Motor vehicle fatalities in South Africa * Source: Road Traffic Management Corporation 10

KEY FACTS Annual fuel sales for road use in South Africa * Source: Road Traffic Management Corporation 11

KEY FACTS Claims lodged with the RAF * Source: Road Traffic Management Corporation 12

REVIEW OF OPERATIONS Revenue 13

ANNUAL FINANCIAL STATEMENTS Statement of Financial performance (Income Statement) 14

REVIEW OF OPERATIONS Analysis of Total Income 15

REVIEW OF OPERATIONS Analysis RAF Fuel levy 16

REVIEW OF OPERATIONS RAF levy vs other fuel levies 17

REVIEW OF OPERATIONS RAF levy – diesel rebate 18

REVIEW OF OPERATIONS RAF Finance income 19

REVIEW OF OPERATIONS Analysis of Total expenditure 20

REVIEW OF OPERATIONS Claims Expenditure 21

REVIEW OF OPERATIONS Number of Claims Outstanding 22

REVIEW OF OPERATIONS Number of Claims Outstanding 23

REVIEW OF OPERATIONS Distribution of Claims settlements 24

REVIEW OF OPERATIONS Number of Claims Outstanding Distribution of claim settlements according to size 25

REVIEW OF OPERATIONS Composition of Claim payments 26

REVIEW OF OPERATIONS Composition of Claim payments – Contingency fees 27

REVIEW OF OPERATIONS Composition of Claims Compensation payments 28

REVIEW OF OPERATIONS Medical Undertaking Claims 29

REVIEW OF OPERATIONS Medical Undertaking Claims 30

REVIEW OF OPERATIONS Claims reported – delay between accident and reporting the claims to the RAF 31

REVIEW OF OPERATIONS Claims settled – time between accident and final settlement 32

REVIEW OF OPERATIONS Claims settled – average settlement amounts Average settlement amount per year finalised 33

REVIEW OF OPERATIONS Claims settled – average settlement amounts Claims greater than R 500 000 as % of total finalised claims 34

REVIEW OF OPERATIONS Large claims – Foreign vs RSA claims 35

REVIEW OF OPERATIONS RAF staff count 36

REVIEW OF OPERATIONS RAF staff productivity 37

REVIEW OF OPERATIONS Cost to Compensation ratio’s 38

ANNUAL FINANCIAL STATEMENTS Statement of Financial position (Balance Sheet) 39

REVIEW OF OPERATIONS Solvency and Capitalisation 40

REVIEW OF OPERATIONS Liquidity 41

REVIEW OF OPERATIONS Number of reported claims vs Incurred claims 42

REVIEW OF OPERATIONS Ultimate claims expenditure per accident year 43

REVIEW OF OPERATIONS Provision for outstanding claims per accident year 44

REVIEW OF OPERATIONS Provision for medical undertakings 45

REVIEW OF OPERATIONS Provision for outstanding claims per accident year 46

RAF Performance against objectives for the 2006/07 Financial Year A National Objectives Strategic Plan Objectives Action Plan Objective Measure Targets Actual 1 Effective Service Delivery Deliver the mandate in an operationally effective and efficient manner Develop and implement effective processes and systems that timeously deliver on the mandate and assist in reducing the backlog New system design and component acquisition by financial year end (Roll out in new year) 31/03/07 Target achieved Business diagnostic report finalised. Functional specifications of ERP and Claims system finalised. Component acquisition: ERP system acquired. Claims system in final stages of being acquired. Transform our Human Capital into a motivated team with a performance driven culture New system design, including performance management system by financial year end Lower RAF costs of administration Cost to compensation ratio; 50% Target exceeded 44% Proposal on proper capitalisation and ongoing funding of the RAF by deadline date 31/03/07 Target achieved A proposal for a fuel levy increase to inter alia, address the backlog, was submitted to National Treasury in October 2006. 2 Minimise the cost of administration and service providers (thus maximising funds available for payment of compensation) 3 Develop a sustainable economic model in conjunction with necessary stakeholders Target achieved Performance management design finalised. Balance Score card system adopted. Software acquired and installed. Implemented for executives & senior managers The Minister of Finance awarded a 5 cents per litre increase in the 2007/08 Budget speech Pursue legislative amendments 4 Develop proposals with stakeholders to restore the RAF to financial health Target achieved Comments on Regulations submitted to NDOT on 4 May 06 Restore financial solvency Liabilities to total assets ratio 2031% 580% Target exceeded Restore financial liquidity Current ratio 0. 2: 1 0. 72: 1 Target exceeded 47

RAF Performance against objectives for the 2006/07 Financial Year (continue) B C National Objectives Strategic Plan Objectives Action Plan Socio-economic Development Adhere to Government’s Socio-economic goals Objective Measure Targets Actual Employment equity 60% 83% Target exceeded Gender equity 45% 54% Target exceeded Disabled 1% 1. 06% Target exceeded BEE Procurement 20% 52% Target exceeded National Objectives Strategic Plan Objectives Action Plan Objective Measure Targets Actual Good Governance & Risk Management Promote good governance Adhere to corporate governance structures by financial year end Existence of a risk assessment framework & risk management structures by financial year end 31 Mar 07 Target achieved Foster positive public image Independent Survey of public image – Percentage positive image 5% Target achieved 40% of respondents that dealt with RAF had a positive view of the RAF 48

SUSTAINABILITY Employment equity 49

SUSTAINABILITY Employment equity 50

ANNUAL FINANCIAL STATEMENTS Statement of Financial position (Balance Sheet) 51

ANNUAL FINANCIAL STATEMENTS Statement of Financial performance (Income Statement) 52

ANNUAL FINANCIAL STATEMENTS Cash flow statement 53

THANK YOU 54

BACK UP SLIDES 55

KEY FACTS Five year review 56

KEY FACTS Five year review 57

KEY FACTS Five year review 58

RAF AMENDMENT ACT Key risk changes introduced by the Amendment Act & Regulations Increased risk: R 25 000 limit removed Hit and run regulations HPCSA tribunal costs constitutional court challenge 59

RAF AMENDMENT ACT General damages 60

RAF AMENDMENT ACT Medical Tariffs General tariff • UPFS Emergency tariff §NHRPL + 25% §Translation §Emergency definition submitted to Trauma Society 61

RAF AMENDMENT ACT Amendment Act Regulations Status report • In terms of the regulations, the Minister of Transport must consult the Minister of Health before the Regulations can finally be enacted. • A meeting between the Ministers has taken place in the week ending 19 October 2007. 62