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

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

3. HIGHLIGHTS Net Fuel Levy Income grows 26.3% Remove
Claims finalised increase 38.6%
Claims backlog drops 23.5%
Compensation paid rises 28.5%
Remove
Cost to compensation ratio improves 8.3%
Cash holdings at year-end R2,4 billion

4. HIGHLIGHTS Despite this …
Outstanding claims liability grows 11.8% to R23.9 billion
Resulting in…
Deficit rising 9.8%% to R20.2 billion

5. ENVIROMENTAL FACTORS ECONOMIC REGULATORY 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 !

6. Losing battle ?

7. ECONOMIC CHOICES Constraints …
Poor capital base (Grossly undercapitalised)
Fuel levy too low to address the legacy
SARS Fuel collection reduces cash receipts by R1 billion
Choices…
Clearing the backlog vs Building reserves/ appropriate capital base

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

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

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

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

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

13. REVIEW OF OPERATIONS
Revenue
Remove

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

15. REVIEW OF OPERATIONS
Analysis of Total Income
Remove

16. REVIEW OF OPERATIONS
Analysis RAF Fuel levy
Remove

17. REVIEW OF OPERATIONS
RAF levy vs other fuel levies
Remove

18. REVIEW OF OPERATIONS
RAF levy – diesel rebate
Remove

19. REVIEW OF OPERATIONS
RAF Finance income
Remove

20. REVIEW OF OPERATIONS
Analysis of Total expenditure
Remove

21. REVIEW OF OPERATIONS
Claims Expenditure
Remove

22. REVIEW OF OPERATIONS
Number of Claims Outstanding
Remove

23. REVIEW OF OPERATIONS
Number of Claims Outstanding
Remove

24. REVIEW OF OPERATIONS
Distribution of Claims settlements
Remove

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

26. REVIEW OF OPERATIONS
Composition of Claim payments
Remove

27. REVIEW OF OPERATIONS Composition of Claim payments – Contingency fees
Remove

28. REVIEW OF OPERATIONS Composition of Claims Compensation payments
Remove

29. REVIEW OF OPERATIONS
Medical Undertaking Claims
Remove

30. REVIEW OF OPERATIONS
Medical Undertaking Claims
Remove

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

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

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

34. REVIEW OF OPERATIONS Claims settled – average settlement amounts
Claims greater than R500 000 as % of total finalised claims
Remove

35. REVIEW OF OPERATIONS
Large claims – Foreign vs RSA claims
Remove

36. REVIEW OF OPERATIONS
RAF staff count
Remove

37. REVIEW OF OPERATIONS
RAF staff productivity
Remove

38. REVIEW OF OPERATIONS
Cost to Compensation ratio’s
Remove

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

40. REVIEW OF OPERATIONS
Solvency and Capitalisation
Remove

41. REVIEW OF OPERATIONS
Liquidity
Remove

42. REVIEW OF OPERATIONS Number of reported claims vs Incurred claims
Remove

43. REVIEW OF OPERATIONS Ultimate claims expenditure per accident year
Remove

44. REVIEW OF OPERATIONS
Provision for outstanding claims per accident year
Remove

45. REVIEW OF OPERATIONS
Provision for medical undertakings
Remove

46. REVIEW OF OPERATIONS
Provision for outstanding claims per accident year
Remove

47. RAF Performance against objectives for the 2006/07 Financial Year
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
Performance management design finalised. Balance Score card system adopted. Software acquired and installed. Implemented for executives & senior managers 2
Minimise the cost of administration and service providers (thus maximising funds available for payment of compensation)
Lower RAF costs of administration
Cost to compensation ratio;
50%
Target exceeded
44% 3
Develop a sustainable economic model in conjunction with necessary stakeholders
Proposal on proper capitalisation and ongoing funding of the RAF by deadline date
A proposal for a fuel levy increase to inter alia, address the backlog, was submitted to National Treasury in October 2006.
The Minister of Finance awarded a 5 cents per litre increase in the 2007/08 Budget speech
Pursue legislative amendments
Comments on Regulations submitted to NDOT on 4 May 06 4
Develop proposals with stakeholders to restore the RAF to financial health
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

48. RAF Performance against objectives for the 2006/07 Financial Year (continue)
National Objectives
Strategic Plan Objectives
Action Plan
Objective Measure
Targets
Actual
Socio-economic Development
Adhere to Government’s Socio-economic goals
Employment equity
60%
83% Target exceeded
Gender equity
45%
54% Target exceeded
Disabled 1%
1.06% Target exceeded
BEE Procurement
20%
52% Target exceeded C
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%
40% of respondents that dealt with RAF had a positive view of the RAF

49. SUSTAINABILITY
Employment equity
Remove

50. SUSTAINABILITY
Employment equity
Remove

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

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

53. ANNUAL FINANCIAL STATEMENTS
Cash flow statement
Remove

54. THANK YOU

55. BACK UP SLIDES

56. KEY FACTS
Five year review
Remove

57. KEY FACTS
Five year review
Remove

58. KEY FACTS
Five year review
Remove

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

60. RAF AMENDMENT ACT
General damages

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

62. Amendment Act Regulations Status report
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.