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

CONTENTS Highlights Review of operations Performance against objectives Financial statements

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

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

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 !

Losing battle ?

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

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

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

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

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

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

REVIEW OF OPERATIONS Revenue Remove

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

REVIEW OF OPERATIONS Analysis of Total Income Remove

REVIEW OF OPERATIONS Analysis RAF Fuel levy Remove

REVIEW OF OPERATIONS RAF levy vs other fuel levies Remove

REVIEW OF OPERATIONS RAF levy – diesel rebate Remove

REVIEW OF OPERATIONS RAF Finance income Remove

REVIEW OF OPERATIONS Analysis of Total expenditure Remove

REVIEW OF OPERATIONS Claims Expenditure Remove

REVIEW OF OPERATIONS Number of Claims Outstanding Remove

REVIEW OF OPERATIONS Number of Claims Outstanding Remove

REVIEW OF OPERATIONS Distribution of Claims settlements Remove

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

REVIEW OF OPERATIONS Composition of Claim payments Remove

REVIEW OF OPERATIONS Composition of Claim payments – Contingency fees Remove

REVIEW OF OPERATIONS Composition of Claims Compensation payments Remove

REVIEW OF OPERATIONS Medical Undertaking Claims Remove

REVIEW OF OPERATIONS Medical Undertaking Claims Remove

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

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

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

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

REVIEW OF OPERATIONS Large claims – Foreign vs RSA claims Remove

REVIEW OF OPERATIONS RAF staff count Remove

REVIEW OF OPERATIONS RAF staff productivity Remove

REVIEW OF OPERATIONS Cost to Compensation ratio’s Remove

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

REVIEW OF OPERATIONS Solvency and Capitalisation Remove

REVIEW OF OPERATIONS Liquidity Remove

REVIEW OF OPERATIONS Number of reported claims vs Incurred claims Remove

REVIEW OF OPERATIONS Ultimate claims expenditure per accident year Remove

REVIEW OF OPERATIONS Provision for outstanding claims per accident year Remove

REVIEW OF OPERATIONS Provision for medical undertakings Remove

REVIEW OF OPERATIONS Provision for outstanding claims per accident year Remove

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

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

SUSTAINABILITY Employment equity Remove

SUSTAINABILITY Employment equity Remove

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

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

ANNUAL FINANCIAL STATEMENTS Cash flow statement Remove

THANK YOU

BACK UP SLIDES

KEY FACTS Five year review Remove

KEY FACTS Five year review Remove

KEY FACTS Five year review Remove

Key risk changes introduced by the Amendment Act & Regulations RAF AMENDMENT ACT Key risk changes introduced by the Amendment Act & Regulations Increased risk: R25 000 limit removed Hit and run regulations HPCSA tribunal costs constitutional court challenge

RAF AMENDMENT ACT General damages

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

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.