RAF Budget 2005/2006
Presentation to the Portfolio Committee on Transport 9 March 2005

Agenda
- Strategic Objectives
- Key assumptions driving budget
- Claims statistics
- Key achievements in 2004/5
- New initiatives in progress
- Statistical overview of Claims
- Summarised Budget
- Questions

Strategic Objectives of the RAF
To promote a road safety culture among mad users
To effectively manage stakeholder relations
To eliminate fraud and corruption
To achieve excellence in RAF business processes

Key assumptions
New Claims lodged - 185,000 per annum
Current Claim backlog is 445.000 - Discounted actuarial valuation is R18,5 billion as at 31 March 2004
Average cost of settlement R22.000 per claim
Rate of Settlement to improve by 15%
Current proposed Legislative amendments will have minimal financial effect on 2005/6 budget-will only have a material impact on 2006/7 budget
Estimated annual fuel consumption is 18.3 billion litres

Claims statistics
[PMG note: diagram not included]

Key achievements impacting budget
Average settlement costs have reduced in 2004; from R27,758 in 2003 to R24,783 in 2004
Claims that are finalised have increased incrementally on a year to year basis when comparing Claims finalised vs Claims lodged; from 66% in 2003 to 96% in 2004
Claims settlement rate has increased dramatically when comparing total finalised vs total number of claims outstanding for 2004 financial year; from 120% in 2003 to 102% in 2004.
Claim administration costs per claim has decreased dramatically from R3,651 per claim in 2003 to R2,818 in 2004
Financial and budgetary controls have been streamlined to ensure effective operational cost management

New Initiatives
Claims backlog-special- project was embarked on to settle high volume, low R value supplier claims were made in December 2004 alone
Validation of outstanding claims provision- project was embarked on to verify outstanding claims independently, as it is thought that a lot of fraudulent claims are unsettled claims
Promotion of Direct claimants - this should significantly reduce legal costs which constitutes a large portion of the total pay out
Forming strategic alliances with organs of state like Dept of Home Affairs & Post Office to make claiming more accessible to claimants in rural areas
Cutting down on Fraud - RAF has joined alliances with SAPS & Scorpions-high success rate
Cases investigated 2132
Successfully prosecuted 727
Cases dismissed/closed 350
Still in progress 292
Still under investigation 763

Strategic Recovery plan
- Verification unit was established to validate claims lodged more accurately long before an offer is made to a claimant
- Evaluation of existing service providers to reduce reliance on them & to enhance internal capacity
- Overall business process re-engineering underway to enable business improvement
- Agreement was reached with Legal profession to structure compensation payments in instalments
- All service provider contracts reviewed to ensure proper service delivery & BEE Compliance
- New Integrated Claims management system has been piloted-will be rolled out to all RAF regional offices
- Proper liquidity management process has been implemented that ensures accurate cash flow forecasting


Statistical overview

2005/2006 Budgeted figures
[PMG note: diagram not included]

Strategic Recovery plan