strategic and annual performance plans 2013-2017 presented by lesibana fosu chief financial officer...

Strategic and Annual Performance Plans

2013-2017

Presented by Lesibana Fosu

Chief Financial Officer

17 March 2012

RAF Representatives

RAF REPRESENTATIVE DESIGNATION

1. Dr. Ntuthuko Bhengu Board Chairperson

2. Lesibana Fosu Chief Financial Officer

3. Andre Gernandt Chief Operating Officer

4. Lyndsey Steel Executive Legal and Compliance

5. Nashrika Sewpersadh Senior Manager – CEO’s Office

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VisionTo provide the highest standard of care to road accident victims to restore balance in the social system.

4

UBUNTUUBUNTU

SOLUTION FOCUSEDSOLUTION FOCUSED

PRIDE IN WHAT WE DO

PRIDE IN WHAT WE DO

We care for and support our customers

We care for and support each other

We offer solutions

We take responsibility for our actions

We commit and demonstrate integrity, honesty, consistency and fairness in our actions and decisions

We model the highest standards of personal and professional behaviour

Presentation overview

1. Mandate 2. Our challenges 3. Strategic objectives and related outcomes4. Projects in progress or new projects: NOM5. Resources available to achieve the strategic objectives6. High level budget7. Summary of Strategic Risks

Mandate

Mandate

• RAF derive its mandate:

– Constitution of the Republic“The constitution of the Republic of South Africa recognizes the injustices of the

past and depicts the new South Africa as an open and democratic society based on human dignity, equality and freedom. Through delivering on it’s mandate, the RAF fulfills the entrenched right to : Equality, dignity, healthcare and social security.

– The Road Accident Fund Act, 1996 ( Act No. 56 of 1996) (the RAF Act)“To compensate users of South African roads for loss or damage wrongfully

caused by the negligent driving of motor vehicles within the boarders of the Republic”.

Our challenges

Our challenges

• The effective functioning of the RAF is hampered by a number of factors.

• These factors can be divided into four categories, namely:

Issues that are common to all delictual-based systems; Issues specific to the South African system; Environmental issues; and Internal challenges faced by the RAF.

Our challenges

The following diagram outlines those key challenges

Strategic objectives and related outcomes

Alignment of the RAF Strategies with Government Priorities

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Priority RAF

Speed up economic growth and transform the economy to create decent work and sustainable livelihood

Introduce a massive programme to build economic and social infrastructure

Develop and implement a comprehensive rural development strategy linked to land and agrarian reform and food security

Strengthen the skills and human resource base

Improve the health profile of all South Africans Intensify the fight against crime and corruption

Build cohesive, caring and sustainable communities Pursue African advancement and enhanced international cooperation

Ensure sustainable resource management and use

Build a developmental state, improve public services and strengthen democratic institutions

Denotes where RAF contributes

Alignment of the RAF strategies with National Transport Priorities

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OUTCOMES / TARGETS OF DEPARTMENT OF TRANSPORT

RAF RAF

Outcome 1 An efficient and integrated infrastructure network that serves as a catalyst for social and economic development

A legislative dispensation that is aligned to principles of social security

Outcome 2 A transport sector that is safe and secure

A legislative dispensation that is aligned to principles of social security

Outcome 3 Improved rural infrastructure, access and mobility

A customer centric, operationally effective and efficient RAF by 2017

Outcome 4 Improved public transport system

Outcome 5 Increased contribution to job creation A transformed and capacitated RAF by 2017

Outcome 6 Increased contribution of transport to environmental protection

Denotes where RAF contributes

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Strategic objectives and related outcomes2013-2017

Projects in progress /new projects: NOM

RAF Journey

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Today

•Amended delict system

o Highly litigious

•Low client service levels limited direct reach

o Long delays

•High cost in terms of legal and expert fees

o Limited internal litigation capacity

•Limited project delivery capacity

oStalled implementation of NOM

•Fineos platform currently centralised

•Large backlogs

Interim Operating Model (IOM)

•Amended delict system but push to reduce litigation by administration changes and legislative amendments

•Increase direct reach as service levels improve

•Set targets on settlement

oService provider – electronic

oLoss of income/support vs. general damages within 120 days

o Funeral expenses, immediate against a fixed tariff

• Pay first approach if direct, accept minor risk of merits resulting in repudiation or apportionment

oBuild internal peer review panel for loss of income/support

oBuild internal litigation/settlement capacity

•Unblock implementation to achieve NOM

•Fineos platform decentralised

• Backlogs reduced via :”War room”

New Operating Model (NOM)

• No fault system

•A ‘poster child’ of efficiency, cost effectiveness and client focus.

• Radically increased direct reach through own resources, civil society and other agencies

•Major PR effort directed to demonstrate the value of going direct

•Tight adherence to service delivery targets

• Either Fineos or a new, simpler operating system

•Backlogs eliminated, genuine pay-as-we-go funding model.

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ObjectiveTo invest in systems and processes that provide superior service delivery to victims of motor vehicle accidents, their families and service providers

Processing of claims

Distributed Customer Services Network

National Coverage

Specialist processing units

Paperless environmentClaims

Processing

11 Official languagesPublic Access

Strong IT backbone

Direct links with hospitals

Customer centric

softwareInfrastructure

Operational efficiency &

effectiveness

New Operating ModelElements of the New Operating Model

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From a passive and inefficient organisation that provides non sympathetic care and relief to MVA* victims...

...To a customer centric, visible and easily reachable organisation that provides sympathetic and speedy service to MVA victims

People

Process

Systems

People

Process

Systems

• Predominantly office based workforce skilled in claims processing and legal compliance

• Predominantly field based workforce skilled in customer relations management supported by a small and highly productive processing personnel

• Monolithic process that is inefficient, lacks transparency and prone to fraud

• Paper based and aging legacy systems that are increasingly difficult and expensive to manage

• Workflow based process that supports work activity governance and expedite processing of claims

• World class systems that automate work activities and reduce errors and fraud

* Motor Vehicle Accidents

The transformation requires that the RAF expands it geographical footprint , create a multi channel environment to engage its customers and improve its claims processing capability

Creating Value through Human Resource Capacity

Alignment to CSSSThe alignment to CSSS will see: Active contribution to Governments

broader social security mandate Alignment of benefits between CSSS

institutions Have the opportunity to transform into a

more sustainable organisation

Road safety awarenessThe end state of increased awareness will

be:• a reduction of road fatalities which will

reduce Governments obligation for accident compensation

• That RAF will have a more fruitful relationship with other road agencies

Patient rehabilitationThe end reached will be that: Our customers will be able to becoming

economically active and self sustainable There will be a reduction on Government’s

longer term social security obligations

END STATE OF THE RAF

Patient rehabilitation

Road safety awareness

Service deliveryThe desired end state in terms

of service delivery will see: Greater accessibility for the

customer Quicker turnaround from

accident to payment Expansion of the service

delivery mandate to include rehabilitation

More equitable benefits to claimants Alignment to

CSSS

Service delivery

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Organisation sustainability

Organisational sustainabilityThe continued sustainability of

RAF will: We will be able to continue our

mandate to ensure that Government continues to provide suitable benefit and rehabilitation for accident victims

Allow an easy transition to a no-fault based benefit systems (RABS)

Allow RAF to focus on eliminating the current claims backlog while enhancing our capability through the new operating model

RAF desired end state

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Resources available to achieve strategic objectives

Resources to achieve the strategic objectives

The following divisions within RAF will contribute towards achieving the strategic objectives:

Business Unit Functional Area What contribution

Core function Customer Service Network (CSN)

•Implement a central Contact Centre aimed at improving accessibility

•Having a multi-channel customer contact and interaction capability that will be available 24/7.

•Provide a link to, and constitute a single point of integration across by:




Assisting in information collection of all accidents and helping to determine the initial merit opinion;

Providing a 24/7 channel for all benefit applicants;

Managing medical undertakings;

Managing medical expenses and providing pre-authorisations; and




Acting as a link between satellite offices, the information collection staff/agents and the benefit processing hub.


Business Unit Functional Area What contribution over 5 years

Core function Benefit Administration Unit (BAU)

•Speedy and judicious assessment of benefit application.

•Establishment of dedicated rehabilitation and life care teams to manage seriously injured individuals.

•Intensify management of undertakings.



Core function Operations • Deploy strategies to run off the backlog of claims.

Some of those key strategies are:Propose amendments to RAF legislation and court rules to reduce legal costs.Design and implement standard claims processes in order to increase efficiency.Training staff on RAF Amendment Act.



Core function Operations Reduce active litigation through proactive claims settlement.Monitor customer experience levels in partnership with the Customer Service Network (CSN).Reduce/curb fruitless and wasteful expenditure in respect of claims costs.



Support function Information Communication Technology (ICT)

•Provide support to existing business and new solutions for the new business model.

•Establish information and technology (IT) plans supported by the enterprise architecture.

•Maintain and upgrade all ICT infrastructure and services.




•Develop, enhance and implement all critical information systems to support and improve the RAF’s service delivery with specific reference to the following:Claims system; andCorporate systems.

•Develop and ensure compliance of IT processes for effective delivery of service to the RAF business.




•Ensure adequate skills development to enable effective support.

•Implement IT Best Practice methodologies, such as ITIL, COBIT, etc.



Support function Finance •Actively engage with National Treasury (NT) and NDoT to determine the adequate fuel levy increase annually.

•Develop internal cost management initiatives for reducing legal and operating costs.

•Enforce compliance with applicable legislations.



Support function Human Capital •Attract and retain talent that will provide support to improve the RAF visibility and accessibility in identified (CSN) locations.

•Manage the development and implementation of Leadership Development Programmes and promote self-initiated learning and development.



Support function Human Capital •Comply with employment labour legislation.

•Develop and implement initiatives to embed a culture of performance.



Support function Marketing, Communication and Stakeholder Relations

•Implement strategies aimed at enhancing awareness around the RAF’s core service offering and its NOM to reflect its increased focus on customer-centricity.

The following tools will be utilised:Stakeholder engagements, Internal and external communications,



Support function Marketing, Communication and Stakeholder Relations

Newsletters, Social networks, Print and broadcast media

Resources to achieve the strategic objectivesBusiness Unit Functional Area What contribution over 5

years

Support function Legal and Compliance •Drive the strategic outcome of achieving a legislative dispensation aligned to social security principles with fixed benefits by 2020.

•This legislation will pave the way for the RAF to transform itself into a defined benefit scheme based on social security principles.

•Motivating and proposing amendments to the current legislation.

High level budget

High level budget

• Zero based• Key assumptions usedVariable Measure FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

General assumptions CPI (%) Percentage 5.7% 5.5% 5.3% 6% 6% Discount rate / investment returns

Percentage 8.0% 8.0% 4.5% 4.5% 4.5%

Fuel sales (billions of litres) – net

Billion Litres 20.1 20.5 20.9 21.3 21.8

Total fuel levy (c/l) Cents per litre

72.0 80.0 88.0 96.0 104.0

Revenue variance adjustment

Percentage 0% -3% -3% -3% -3%

No. of claims finalised Number 187 168 253 612 210 789 193 157 187 982 Staff headcount Number 2 030 2 075 2 100 2 100 2 100

High level budgetStatement of financial performance (R’000)

Key performance indicator

Actual2011

Forecast 2012

Budget2013

Budget2014

Budget2015

Revenue 14,526,222 15,974,601 18,012131 20,241,949 22,636,259

Claims Expenses

12,941,146 14,019,687 12,607,682 12,442,984 12,860,611

Other operating Expenses

932,480 1,147,449 1,270,461 1,294,005 1,477,022

Financing Cost

43,288 25,242 11,132 10,000 11,000

Increase in liability

2,281,052 (1,049,909) 1,063,040 2,240,436 3,010,029

(Deficit)/Surplus

(1,671,744) 1,832,132 3,059,816 4,198,143 5,277,598

High level budgetStatement of Financial Position (R’000)

Key performance indicators

Actual2010

Forecast2012

Budget2013

Budget2014

Budget2015

Current assets

4,239,037 5,117,782 9,319,320 15,814,938 24,188,246

Non- current assets

327,600 330,798 322,922 325,528 320,808

Total assets 4,566,637 5,448,580 9,642,243 16,140,466 24,509,053

Current liabilities

985,106 1,085,089 1,160,263 1,226,271 1,312,449

Provision for outstanding claims

44,862,183 43,558,684 44,344,008 46,281,346 48,960,574

Non current liabilities

2,734,339 2,987,666 3,261,015 3,557,750 3,883,333

Nett Liabilities

(44,014,991) (42,182,860) (39,123,043) (34,924,901) (29,647,303)

High level budgetCash flow Statement (R’000)

Description Actual2011

Forecast2012

Budget2013

Budget2014

Budget2015

Cash flow from operations

529,435 607,470 3,706,847 5,785,555 7,347,930

Cash flow from investing activities

(43,435) (67,000) (57,000) (75000) (82,200)

Cash flow from financing activities

(43,288) (25,242) (11,132) (10,000) (11,000)

Cash and cash equivalents

1,137636 1,715,650 5,513,440 11,590,363 19,529,584

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High level budget

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High level budget

Summary of Strategic Risks

Strategic risks

Risk Description Mitigation Solvency

Due to unsustainable financial model, the RAF runs at a substantial deficit each year Funding relates to claims due as opposed to claims incurred.

Engage with National Treasury for future utilisation of the revenue model and ongoing maintenance of the model.

Support DoT in RABS Bill

legislative process Liquidity The RAF levy is determined with little regard

for the main drivers of the RAF’s claims expenditure such as

The number of accidents on the roads,

Number of vehicles driven, The volume and quantum of the

benefits payable by the RAF, and Inherent inflation of the benefit levels.

Engage with National Treasury in relation to future utilisation of the revenue model and ongoing maintenance of the model

Strategic risks

Risk Description Mitigation Fraud and corruption

The RAF operates in an environment that is targeted by fraudsters both internally and externally.

Implement the Fraud Prevention Policy, which includes rolling out of the Fraud Detection and Prevention Awareness campaign

Improve fraud detection and prevention measures such as the fraud hotline and staff training

Conclude agreements with

law enforcement agencies

Strategic risks

Risk Description Migration Reputation and image

Due to the implementation of fundamental changes to its operations and strategic direction, it is imperative that the organisation communicates the coming changes to customers and stakeholders. RAF’s ability to improve the accessibility and perception of the organisation to the public.

Full implementation of the Integrated Marketing, Communications and Stakeholder Relations Strategy

Increase the RAF

geographical footprint

Train all staff to focus on customer-centricity

Focus on service delivery

Strategic risks

Risk Description Mitigation Implementation of the New Operating Model

The RAF is overhauling its business. The process will lead to the establishment of a New RAF that is more customer-centric, effective and efficient. While the core of the New RAF will be a new, fully electronic, paperless, integrated claims management system, this is but one of many components. The system will be supported by further changes throughout the RAF’s value chain and will include new customer service channels, a broad geographic footprint, an internal legal department, enhanced branding activities, etc. These changes have been designed to ensure that the RAF customer receives high-quality service, where claims are processed quickly and accurately, at less costs and fraud eliminated.

Implement effective change management

Complete the roll-out of

the NOM Strengthen project

governance Develop a quality

assurance function Prepare and implement a

Business Continuity Strategy

Strategic risks

Risk Description Mitigation Regulatory framework/environment/ legislation

The current system for road accident compensation in South Africa is fault-based and founded on the law of delict. This scheme is complex and subjective, it is often time- consuming and expensive legal procedures in order to establish fault and the quantum of damages suffered. The RAF strives to continuously be a part of the ongoing initiatives to implement a defined benefit no-fault system. It may take a few years before this new legislation is implemented. Therefore, the RAF has amended the RAF Act by removing some of the subjectivity from the current system.

Support the DoT in effecting legislative changes

Provide comments and

inputs on the no-fault policy

Engage with the IDTT

Strategic risks

Risk Description Mitigation Claims backlog

The RAF has a large claims backlog. This backlog is mainly due to the under-funding of RAF for a number of years, and not being able to pay claims at the rate it receives them.

Implement strategies to run down the claims backlog

Improve internal

efficiencies to better turnaround times for claims settlements

Engage key stakeholders

to obtain support for initiatives

QUESTIONSQUESTIONS

strategic and annual performance plans 2013-2017 presented by lesibana fosu chief financial officer...

Documents

raf strategies

raf actto

south africansintensify

republic of south africa

new south africa

social security

social infrastructuredevelop

social system