strategic and annual performance plans 2013-2017 presented by lesibana fosu chief financial officer...
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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.
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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:
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution
Core function Customer Service Network (CSN)
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
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution
Core function Customer Service Network (CSN)
Acting as a link between satellite offices, the information collection staff/agents and the benefit processing hub.
Resources to achieve the strategic objectives
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.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
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.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
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.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
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.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
Support function Information Communication Technology (ICT)
•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.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
Support function Information Communication Technology (ICT)
•Ensure adequate skills development to enable effective support.
•Implement IT Best Practice methodologies, such as ITIL, COBIT, etc.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
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.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
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.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
Support function Human Capital •Comply with employment labour legislation.
•Develop and implement initiatives to embed a culture of performance.
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
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,
Resources to achieve the strategic objectives
Business Unit Functional Area What contribution over 5 years
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