institutional reform for enhanced productivity cpsi innovation... · institutional reform for...

Institutional Reform for Enhanced Productivity

2013 CPSI Public Sector Innovation Conference

21 August 2013

Purpose

•The purpose of this presentation is to speak to “Institutional Reform for Enhanced

Productivity in the RAF” in the context of “Leveraging Innovation as a catalyst

for enhanced Public Sector Productivity”

− Background information on the RAF...

− Where the business is...

− Institutional Reform...

− Innovative case studies resulting in improved productivity...

Background…

•Road Accident Fund Act, 1996 (Act No. 56 of 1996) & RAF Amendment Act, 2005

(Act No. 19 of 2005)

− “Payment of compensation in accordance with this Act for loss or damage

wrongfully caused by the driving of a motor vehicle”

− Provide compulsory cover to all users of South African roads against injuries

sustained or death arising from accidents involving motor vehicles within the borders

of South Africa

•National public entity (Schedule 3A of the PFMA)

•Constitutional Court Rulings and legal precedents have shaped the mandate

•The Fund is called on to:

•Provide a social security safety net

• Indemnify, rehabilitate and compensate the injured

•Promote the safe use of all South African roads

Corporate and Statutory Form

Background...

•South Africa...Roads...Cars...Transport...Crashes...Fatalities....Injuries...Consequences!

− 40 fatalities per day with 20-50 serious injuries per fatality

− Lead cause of death in persons younger than 30 years of age

•70 year funding regime driven by an “accessible” revenue stream

− Moved from protecting a wrongdoer from being sued to supporting victims

•Compensation is fault-based and fault must be proven or excluded

•Rulings and Orders are not always consistent and lean to subjectivity

− Inequitable outcomes shaped by the legal spend and historic income

− Legal officer with whiplash awarded R2.8m for a week off

•Micro-economy has been created and is sustained by the RAF

− Lawyers, Advocates, Assessors, Experts etc

− Contingency fees charged in excess of 25%

•Scale of operation frequently overlooked

− 50% of matters on the Court roll relate to road accidents

− RAF is 4 x the size of the UK based Motor Insurer’s Bureau (£268m)

•Fraud is common place

•Claimants do not receive all that is awarded

Operational Context

Background...

Social Context

Social

Security

Pillar

Solvent Ben. Benefit

Social Support

Funding Loss of

Income

Loss of

Support

Medical

Costs

UIF Yes Employed ++Limited Yes No No Payroll tax &

Related

COIDA Yes Employed +Limited Yes No Yes Payroll tax &

Related

SASSA Yes Poor +++Limited No Yes No Fiscus & Budget

RAF No All Unlimited &

Increasing Yes Yes Yes

Fuel Levy &

Unrelated

Background…

Business Model

Road Activity

Number &

severity of

accidents

Levy on fuel

Grants &

investment

revenue

Financial

Position

Volume of

claims

Value of claims

Third party

costs

Administrative

costs

Fuel sold

Revenue

Cost

Background…

Business Model

Claims Origination Claims Determination Claims Litigation Claims Finalisation

Claims Processing Value Chain

Hospital service centres

Community service centres

Document Management

Validation, Verification & Registration

Mobile RAF

Medical

Represented claims

Direct claims

Summons administration

Internal law department (ILD)

Magistrate, high & district court litigation

Panel attorney management

Capital payment

Legal cost validation

Legal cost payment

Writs management

Judgement monitoring Claims file closure

Post Claims Settlement

Post claims management

Merits

Background…

•Physical

− Head office in Centurion

− Five regional processing centres

Pretoria, Johannesburg, Durban, East London and Cape Town

− Customer service centres

Nelspruit

Mafikeng, Bloemfontein, Polokwane and Kimberley

•Virtual

− Call centre (0860 23 55 23)

− Web (www.raf.co.za)

− Twitter (@RAF_SA)

− Facebook (www.facebook.com/#!/RoadAccidentFund)

Service Infrastructure

http://www.raf.co.za/

Background...

•The RAF carries an extensive legacy, partly true and partly perceived, which was built

over many decades

•Some facets of this legacy are:

− Compensation scheme that has struggled to be sustainable

− ‘Insolvent and bankrupt’

− A lawyers company

− Intensely bureaucratic

− Inefficient, uncaring and impersonal

− Unable to complete programmes and tasks

− Frozen in a state of perpetual change

− Incapable of paying claims

− Fraught with fraud

•The Board and management committed in 2012 to create a new legacy, one of

delivering services efficiently and effectively to victims of crashes who need the

support

•Early signs of change are visible...

The unfortunate legacy

Purpose








Where the business is…

Status at the end of 2012/13

FY2012/13 FY2011/12

Claims Lodged 150,312 172,859

Claims Finalised 162,130 170,043

Avg. Cost of a Claim (R) 65,844 54,808

Avg. Cost of a Personal Claim (R) 138,345 99,614

Avg. Legal Cost per Claim (R) 68,671 53,412

RAF Fees (R) 16,015 14,878

Plaintiff Fees (R) 52,656 38,534

No. Of Claims Awaiting Payment (Compensation or Cost) 279,912 264,579

No. Of Claims where Legal Costs have not been paid 67,287 16,555

No. Of Claims where Compensation has not been paid 212,085 248,024

No. Of Personal Claims where Compensation has not been paid 183,519 211,505

No. Of Direct Claims 31,737 27,621


•2012 was “The Year of the Customer”

•Road Accident Fund (Transitional Provisions) Act, 2012 enacted on 13 February 2013

•Supreme Court of Appeal in Lebeko and Duma confirmed that it is not for the court to

determine whether the injury is serious

•High Courts declared so-called “common law” contingency fee agreements that do not

comply with the Contingency Fees Act, 1997 invalid

•RAF on the Road in 15 communities, serviced more than 8 000 claimants and settled

R102 million

•Nelspruit customer service centre was established and is fully operational

•Streamlined business processes designed, documented and implemented

•New organisational structure designed and implemented

•Quicker turnaround times for the settling of claims recorded

•The average number of compensation payments and finalisations per claims handler

improved

Highlights in 2012/13


•SOP for the management of writs of execution developed and implemented

•Full review of all claim files was undertaken and the staging and location of all open

claims is now known

•Contract and bid templates developed to ensure efficient tender processes

•Various regulations to the Act were published

•Risk management methodology and systems reviewed, evaluated and changed

successfully

•Audit findings were resolved and the AG’s audit opinion is ‘clean’

•Fund achieved 86% of APP targets (53% in 2011)

• In summary:

− The RAF has shown in 2012/13 that a new legacy is being written. The challenge

will be to ensure that the initial success is translated into a sustained effort!

Highlights in 2012/13

Purpose








Institutional Reform...

• Institutional reform cannot take place purely on the basis of a displeasure with the

state of affairs, but must be shaped by how the state of affairs is failing the mandate

•A candid review of the Fund’s legacy, performance, mandate and priorities was

undertaken... The need for reform was accepted... Strategies were determined and

implemented

•Operational priorities were set

− Ensure optimal capacity

− Maintain efficient operational processes and costs

− Improve claim processing and prioritise direct claims

− Improve litigation management

− Improve data collection, analysis and reporting

− Roll out the national customer service footprint and RAF spatial plan

− Procure claim administration services

− Implement claim system enhancements

The basis for reform

Institutional Reform...

• Emphasised accountability

• Departed from the culture of excuses, explanations and justifications

• Reviewed, revised and aligned business and strategic plans

• Engaged stakeholders

• Connected the “work” to the Fund’s mandate

• Established reporting mechanisms and lines, as well as guides and templates

• Analysed and determined performance norms and standards

• Opened communication channels and actively engaged all staff

• Assessed capacity ~ people, performance, equipment, processes and infrastructure

• Designed and implemented a new organisational structure

• Developed and documented business processes across all areas of the Fund

• Created uniformity in HR practices

• Established effective management structures and recruited extensively

• Adopted performance management as our central tenet

• Took stock of our core business by auditing all outstanding open claims

• Declared a relentless commitment to pursue excellence

• Innovated...

How?

Purpose








in•no•va•tion (ˌɪn əˌveɪ ʃən)

n.

1. Something new or different introduced.

Random House Kernerman Webster's College Dictionary

Innovative case studies...

Nelspruit Direct Claims Pilot


•Problem statement

− Slow turnaround times in processing and finalizing direct claims (not represented)

− Claims took 3-4 years to settle and direct claimants were lost to third parties

•Concept in a nutshell

− Test end-to-end direct claim processing with a view to improving turn around times

for all direct claims

•Desired outcomes

− Improve processing efficiency

− Improve stakeholder relationships (SAPS, Emergency medical services and

Department of Health etc)

− Enhance communication and First Point of Contact query resolution

− Promote collaboration between front and back office

− Produce quality management reports

•Time frame

− Six months

•Responsible team

− Project Management Office



•Outcomes

− Reduced turnaround times for claims

− Improved engagements with claimants

− Increased visibility in the community

− Informed stakeholders now more involved



Organisational Re-Alignment


•Problem statement

− The Fund had operated two distinct organisational structures simultaneously,

segregation was absent, certain management tiers were missing and the structure

was no longer aligned to the actual business


− A re-alignment of the structure needed to be implemented in a finite period of time

with a view to ensuring that there was one, efficient structure aligned to the mandate

and strategic objectives.

•Desired outcome

− A singular structure, with a singular grading and salary structure

− Optimal segregation and management control

− Creation of autonomous regional processing units

− Every employee placed, with the avoidance of disputes and grievances

•Responsible team

− Human Capital

− Multi-disciplinary project team



•Outcomes

− Manageable span of control established

− Clear reporting lines put in place from the CEO to supervisor

− No employee was left without a similar or equally graded job

Every employee accepted their new posts formally

− Every job profile was reviewed, graded and benchmarked

− Developed, approved and implemented business processes

− Training was conducted throughout the business

− Central coordination of complaints management was launched

− Correspondence and Quality Assurance teams were established in each region

− New operational levels were created to fulfill a business need and to foster career

progression

− IT system rights were restated for all jobs and access redefined

− A single, segregated structure is now in place



WRITS SOP


•Problem Statement

− The late payment of court orders and taxed legal cost bills result in the issuing of

warrants of execution against the RAF, which in turn cause sheriff, sundry and

interest costs.

− AG classified this as fruitless and wasteful expenditure and commented on the

absence of controls to prevent and detect the above costs.


− Design and implement an SOP to serve as a control and to reduce the costs

•Desired outcome

− Ensure that all court orders and taxed legal costs bills are paid within prescribed

time frames

− Pay WRITS within 48 hours of being served

− Address the audit recommendations

•Time frame

− Three months

WRITS SOP


•Responsible team

− Project Management Office

•Outcomes

− Reduced the number of writs issued against the RAF

− Reduced the sheriff, sundry and interest costs

− Reduced fruitless and wasteful expenditure

− AG removed the audit finding

WRITS SOP

Description 2011/2012 FY 2012/2013 FY Variance % Reduction

Writ issued and paid 11656 7842 3814 32%

Description 2011/2012 FY 2012/2013 FY Variance % Reduction

Total sheriff,sundry and interest costs. R 46,000,000.00 27,226,137.96R 18,773,862.04R 41%


RAF ON THE ROAD


•Problem Statement

− Despite offices in major centres, the Fund had distanced itself from claimants


− A decision was taken to initiate a countrywide community outreach campaign, which

was dubbed ‘RAF on the Road’ - taking our service offering to the doorsteps of

communities nationally

•Desired outcomes

− Interacting directly with community members who have been affected by motor

vehicle accidents

− Educating road users about the RAF and the importance of road safety

− Strengthening relationships with stakeholders

− Promoting direct claims

− Reducing incidences of fraud and corruption

RAF ON THE ROAD


•Time frame

− The campaign was initiated early in 2012 and runs at least once per month

•Responsible team

− Multi-functional project team including most of the RAF’s business units

− Lead by Marketing’s Activation and Promotions team

•Outcomes

− 20 communities have been serviced countrywide

− Solid business relations have been built with the three spheres of government

− More than 10 000 claimants have been assisted

− Settlement offers in excess of R126 million have been made

RAF ON THE ROAD

Conclusion

•RAF has not been in ‘the best of places’

− Challenges, weaknesses and risks were entrenched and often long-standing

•Change is taking place and there is growing recognition of the Fund’s mandate and

contribution

•Great effort is and will continue being placed on:

− Fulfilling the strategic objectives

− Addressing the challenges and risks

− Providing efficient support to the victims of road accidents

− Preventing the catastrophic socio-economic effects of accidents in our society

•Our journey of innovation, change, delivery and excellence has only just begun...

Thank You

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