Arrive Alive

Road Accident Fund and Assistance to Road Crash Victims

Background…

Corporate and Statutory Form

  • Road Accident Fund Act, 1996 (Act No. 56 of 1996)
  • Road Accident Fund 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
  • Constitutional Court Rulings and legal precedents have shaped the mandate
  • PFMA
    • National public entity - Schedule 3A

The unfortunate legacy

  • The Fund carries an extensive legacy which has been built over decades - partly true and partly perceived
  • Perceptions include:
    • Compensation scheme that has struggled to be sustainable
    • ‘Insolvent and bankrupt’
    • A lawyers business
    • Intensely bureaucratic
    • Inefficient, uncaring and impersonal
    • Unable to complete programmes and tasks
    • Frozen in a state of perpetual change
    • Fraught with fraud

Early signs of change are visible...

Business Model

Business Process

Points of contact

  • Physical
    • Head office in Centurion
    • Five regional processing centres
      • Pretoria, Johannesburg, Durban, East London and Cape Town
    • Customer service centres
      • Nelspruit
      • Mafikeng, Bloemfontein, Polokwane and Kimberley
  • Virtual

Strategy…

Mission, vision and values

  • Minister of Transport approved the new 2013-2017 Strategic Plan and the 2013/14 Annual Performance Plan (APP)
  • Mission: To provide the highest standard of care to road accident victims to restore balance in the social system.
  • Vision: 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.
  • Values:
    • Ubuntu
    • Pride in what we do
    • Solution focused
    • Excellence
    • Efficiency

Where the business is…

Highlights in 2013/14

  • Revenue increased by 13% to R20,6 billion
  • Claims processing improved by 47% to a record high of R22.2 billion
  • The number of open claims reduced
  • Cash expenditure on claims exceeded the net Fuel Levy by R1.9 billion (9%)
  • Proactively made business operations more accessible and efficient
    • Interacted with more than 20,000 claimants throughout the year
    • Engaged road accident victims through our „RAF on the Road?
      • 16,000 claimants and settled R376 million in claims
    • More than 250,000 calls were responded to by the Call Centre
    • Over 25,000 people follow RAF?s social media presence
  • Quality Assurance managers tested operational performance and compliance
  • Service perception increased to 64% from 52% and customer satisfaction went up to 72.8% from 66%
  • New organisational structure and business processes were fully rolled out
    • Staff complement has grown to 2,288
  • Implemented a performance management system and succession management plan
  • Combined Assurance Forum and Policy business unit formally established
  • Maintained an Enterprise-wide Risk Management Framework
    • Risk maturity level has improved to Level 4 out o 5 (EY)
  • Executed the strategic plan
    • 83% of Annual Performance targets in 2013/14
  • Audit findings were resolved and many risk mitigation measures implemented.
  • Clean Audits by the Auditor-General of South Africa
    • 2012/13 and 2013/14
  • Rolled out a revised fraud prevention plan and strategy
    • 478 arrests and 573 convictions
  • The draft Road Accident Benefit Scheme (RABS) Bill was published for a second round of public comments
  • Significant Court Rulings clarified the scope and limitations of Contingency Fees
  • A seriousness has been introduced in respect of what the Fund is, what it should be and what its employees, as loyal officers, are required to do
  • Overall, a shift was made in respect of the focus on the socioeconomic impact of crashes on families, homes and communities
  • And people were put first – Batho Pele

 

2013/14 2012/13 2011/12

Fuel levy

96c/

88c/l

80c/l

Total revenue

20.5bn

18.1bn

17.1bn

Claims expenditure

22.3bn

15.2bn

12.2bn

Provision for claims incurred (liability)

97.0bn

82.8bn

72.0bn

Growth in o/s claims provision

14.2bn

10.2bn

24.9bn

Loss

17.3bn

8.5bn

21.1bn

Deficit

90.8bn

73.5bn

65.1bn

  • Compensation pay-outs
    • General damages
    • Income support
    • Medical costs
  • 17.5bn (78%)
    • 5.9bn
    • 10.4bn
    • 1.2bn
  • 11.3bn (74%)
    • 4bn
    • 6.2bn
    • 1.1bn
  • 9bn (73%)
    • 3.9bn
    • 4.3bn
    • 800m

Cash balance

2.5bn

6.1bn

4.2bn

Claim payments

211,099

227,855

225,905

Status at the end of 2013/14

Challenges managed

  • Inherent adversarial ‘fault-based’ Compensation System
    • Restricted access to compensation, long settlement periods, spiralling costs,
    • Multiple, complex and legalistic hurdles
    • Uncertainty as to whether compensation is ultimately used for the intended purpose
  • Compensation for Loss of Support and Earnings
    • Amendment Act increased passenger claim payments
    • Claims for future loss-of-earnings have increased, with minimal proof of loss of earnings often required
    • Forecast reports on career progression and promotions are now factored in
  • Legal Costs
    • Untenable that 21% of the total claims payment of R22 billion (an improvement on 25% in the prior year) is spent on legal fees
      • R1.7 billion spent on RAF's and R2.9 billion on claimant's legal costs
  • Financial Sustainability
    • Fuel Levy
      • Funding via the Fuel levy is not associated with claim frequencies and costs
    • Claim entitlements
      • Beneficiary base is not constituted by past, present or future contributors
      • Benefits are not defined and in some instances are not limited to a maximum value
      • Social security assistance is not limited to protecting income, lending support or funding healthcare needs, but extends to all three key
    • Claims expenditure
      • Provision for claims incurred has increased at levels far greater than CPI
      • Cash claim payments exceed the fuel levy income and this is compounded by operational efficiencies and productivity improvements
      • Claim values have increased as a result of the Amendment Act which excludes minor injuries and market forces aimed at higher value "pay-outs"

Where the business needs to go…

Priorities for 2014/15

Summary…

Transformation underway

 

2011/2012

2012/2013

2013/2014

Strategic plan validity

Not aligned to strategy and erroneous

Aligned to strategy and SMART targets

Strategy executed and mature

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 - Offices

5

6

6 + 4 CSC's

National footprint - HSC’s

52

76

83

Direct Claims Originated

15 %

23%

27%

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 Award

Internal Audit Findings

N/A

147

338

Risk Maturity (1 - 5)

N/A

3/5

4/5

Compliance Unit

N/A

Planned

Operational

Strategy and Reporting

Verification and Validation

Quality Assurance

Complaints Management

Conclusion

  • In 2013/14 the Fund improved productivity, paid record claims, reduced the number of open claims, deployed cash efficiently and improved controls
  • Great expectation rests on our shoulders based on recent performance despite the challenging environment in which the Fund operates
  • Next phase of transformation will be difficult as fundamental challenges need to be resolved
  • It is important that the RAF remains focused on fulfilling it's mandate and strategy, whilst pursuing excellence….

Also View:

Post accident Medical claims and the RAF

Road Accidents and Personal Accident Insurance and Benefits

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