COMPENSATION FOR OCCUPATIONAL INJURIES AND DISEASES ACT, 130 OF 1993 AS AMENDED (COIDA) DEPARTMENT OF LABOUR: COMPENSATION FUND PRESENTATION TO THE SELECT COMMITTEE FOR LABOUR ON 26 AUGUST 2009

THE COMPENSATION FUND Social insurance within the social security system in South Africa. Administered under the Compensation for Occupational Injuries and Diseases Act, 130 of 1993 as amended in 1997. Public Entity in the Department of Labour. The Director-General is the accounting officer The Compensation Commissioner (DDG) reports to the DG. Generates revenue from employers’ annual contributions-employers register with the Fund and report accidents.

Compensation Board CF Board is a statutory body- comprises organised business, organised labour, government and medical experts. Advises Minister of Labour on policy matters, amendments to the Act, annual increases in benefits, appointment of assessors. Director-General can request the board to investigate any issues.

Legislative framework and policies Constitution Act, 108 of 1996 Compensation for Occupational Injuries and Diseases Act 130 of 1993 as amended. COIDA regulations. Recognition of Customary Marriages Act Public Service Act. Public Finance Management Act DPSA guidelines on COIDA COIDA policies on occupational diseases and injuries

Business operations of the fund Employers are classified according to nature of operations. Assessments are based on the risk profile of employer. Generates revenue from employers’ annual contributions-Employees do not contribute. COID Act operates on a no fault principle Recourse for employees- section 56 increased compensation for negligence by employer. Section 91 objections-heard by a tribunal. section 22 covers employees on ‘willful misconduct’

Operations continued… Employers may request transfer to mutual associations Two Mutual associations operate under license from the Minister of Labour to process COIDA claims. Minister sets conditions for Mutual Associations e.g security guarantees. The DG determines provisional settlements to monitor mutual associations. Rand Mutual operates in the mining industry FEMA operates in the construction industry. Government departments are exempted from annual contributions-their claims are adjudicated by the Fund.

COIDA Benefits structure Permanent disablements (PD) are scheduled in Schedule 2 and 3 of the COID Act- Unscheduled PD are those not in the Act (Brain injuries, multiple injuries, internal injuries)- PD is determined by in house medical officers. Benefits are based on the employee’s medical condition to determine permanent disablement (PD) -employee’s earnings and medical reports are imperative Lump sum payment-below 31% PD Monthly pension -From 31% and above

Benefits-continued… Medical expenses including- assistive devices (prosthesis). Widows pension-40% Widows lump sum Children’s pension up to 18 years-60% Pension commutation. Temporary Total Disablement-loss of earnings(75% of earnings). Burial expenses. Constant attendance allowance

Rehabilitation Currently, the CF does not have policy on rehabilitation and early return to work Rehabilitation Centres Two Centres established by the Compensation Fund in Durban and Benoni – under section 4(2)(b) Centres are private organizations but are not profit driven. Run by managers who report to the Board of Directors-CF and is also represented in the board. Funding- CF used to provide 90% funding but has since been phased out.

Business processes- high level

Supporting IT systems Axes One-Revenue and Finance E-Claims for processing CLAIMS FYI-electronic file for claims Centura systems –generates form letters for claims.

FINANCIAL INFORMATION Revenue generation The Fund has 387 000 registered employers. Raised over R3.9 billion ($500m) employer’s annual contributions in the past financial year. Net assets amount to R 21 billion($2.7billion)- reserves plus pension account.

FINANCIAL INFO. CONT…. Expenditure on claims Over 203 711 claims have been reported from 01 April 2008 to 31 March 2009. From a total of 815 045 medical accounts, R1,544,970,689 billion was paid by 31/03/2009. From a total of 327 647 compensation payments, R630 m was paid by 31/03/2009.

Distribution of medical claims submitted for 2008/2009 financial year General Practitioners 27% Private Hospitals 21% Diagnostic Radiology 18% Physiotherapist 7% Orthopaedics 6% Pathology 5%

Graphical distribution of medical claims submitted

Total medical payments for the past three years

Graphical presentation of payments over the past three years

Number of compensation benefits for the past three years NO OF PAMENTS RAND VALUE 2006 331672 R655000000 2007 335345 R652000000 2008 327647 R630708449

Graphical presentation of compensation benefits

Current challenges facing the Fund Lack of capacity for revenue generation, debt collection and Supply Chain Management. Slow settlement of claims thus eliminating backlogs. Non and/or delays in reporting of accidents and submission of documents Lack of adequate IT resources and Infrastructure Disparate IT systems Outdated business processes Decentralization of functions Audit qualifications.

Current interventions New business processes have been developed and are pending the development of the new IT system- The new system is being developed in collaboration with Rand Mutual Assurance (RMA). - Electronic submission of claims will be possible - Will facilitate the final decentralization of the remaining functions - Will facilitate automation and organizational structure re-design Organizational structure re-design- A service provider has already been procured by tender.

Current interventions cont…. The COIDA Enforcement policy was developed and is being implemented by provinces. A new case management IT system is currently under development by Inspection and Enforcement Services The decentralization of claims pilot will be rolled out to 4 provinces by 30 March 2010-Currently the pilot is running at Limpopo Provincial Office. Action plans on all audit queries have been put in place and the project will be complete by 30 March 2010. Intensify communication with stakeholders in line with the current communication strategy namely-Public Service employees educational campaign, reporting of accidents campaign

Future plans/initiatives of the fund New Policy Options Development of policy on rehabilitation and re-integration of an employee following an occupational injury. Review the pension policy regarding the death of a pensioner through natural causes. Joint strategy with RAF on assessment of permanent disablement and payment of medical aid. Integration of COIDA with the current comprehensive social security reforms proposals within government.

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