It Was A Bleak October

1. Introduction
During the past month we have seen numerous financial catastrophes throughout the world. South Africa will not escape the domino effect of the overseas crises. In fact you have already witnessed the results such as the weakening Rand. It is also common cause that companies big and small are feeling the financial crunch. Talking to people in the business sector I am being told of the enormous number of bad debt cases. You read in the financial press of all the houses and vehicles being repossessed, thousands per month. Every economist is telling us to scale down spending habits. Tighten your belts is the general message

2. Financial Crisis and Workers’ Compensation
How do the financial woes affect workers’ compensation? Mostly indirectly but in some ways directly as well. It is however a fact that it will impact on your workers’ compensation costs. Let me just name a few examples of what is at stake because of the financial situation; keep in mind the fact that bad debt as you all know has become a critical issue for all concerned:

(a) Medical Costs
The rise in medical costs has always and will most likely always be higher than the inflation rate. I have not the space nor the knowledge to be able to fully explain it to you. The mere fact that medical service providers are waiting a long time to be paid for their services must however have a definite effect on the percentage increase. The Compensation Commissioner’s office has never been known for prompt payment of medical accounts and, let’s face it, the provider will make up for the loss in interest of such late payments. The latter, i.e. late payments, seems to be on the increase and under present difficult financial circumstances the issue will be become more and more serious. The latest fashion, over a number of years, is for the service provider such as the doctor and hospital to “sell” their COID accounts to a third party for, lets say, 10% less the face value. Scientific research to determine the impact of the practice will, I think, be a waste of time as nobody will admit that accounts are being “loaded” to make up for the “sales” discount. Even the monthly noseweek magazine has very recently published an article about this questionable practice, and if track record counts for anything, they very seldom make mistakes.
The lesson from this is that the employer should on a continuous basis monitor the medical accounts that are submitted by the service providers via the employer for payment by the COID office. If you have no experts in this regard such as nursing sisters familiar with the COID tariffs, you should obtain outside assistance from the experts in this field. My colleagues at WCA Workers Compensation Assistance can surely be of help. Spend R1,00 to save R10,00

(b) Accident Frequncy & Severity
A problem with the claim statistics in South Africa is that they only become available many years after the accidents have occurred. The latest Statistical Report published on the Compensation Commissioner’s website (sorry Department of Labour’s) covers the period to December 1999 (this is nearly ten years old). The department in the Report explains the reason as follows:
The report on statistics aims to include as much information as possible on accidents that occurred in the year of the report.  For this reason the coding of a year’s accidents starts about 18 months after the end of the year.  It has been found that after this time lapse most of the costs of accidents have been incurred.  The coding of a year’s accidents takes about 12 months.  The coded records are stored in a database and after the closing of a year’s coding are moved so that the database is ready for the next year’s records.  The records are moved to a database where they are accessible to queries, which are used to extract the data to draw up the various tables of the report.  Drawing up the report takes 4 to 5 weeks.  The report for a specific year’s accidents becomes available 31 to 36 months after the end of that year.
The Accident Statistics for the year 1999 were closed off on 14 July 2003 and include 179 399 Accident Fund cases finalized at that date and 44 215 cases reported during 1999 for the other insurance carriers, making a total of 223 614 cases in respect of which compensation and/or medical aid was paid. In addition to these 35 841 claims were repudiated.

(I leave the time calculations to you intelligent people.)
What bothers me is the number of hand/arm injuries resulting in amputations that I have seen over the past year. Whether statistically speaking there was in fact an increase is not possible to determine from available statistics. Another trend that I have noticed is the fact that so many of these accidents occur in connection with conveyor belt equipment. During the past month I have seen 4 such cases. Whether these types of accidents are on the increase again is unknown because of the lack of statistics.

3. The Result
All the above factors will lead to one thing only and that is higher assessments rates and higher assessments. The bottom line for you is to improve your safety standards and at the same time to practice cost containment as far as the medical costs are concerned. Do not fall in the obvious trap of becoming unconcerned because the state’s duty to enforce safety legislation and associated regulations have deteriorated or has become non-existent.

Finally do not waste money by paying penalties and interest on assessments simply because you have missed the due dates.

This was not intended as a sermon. Just a kind reminder of what has happened in a few big and clever countries because of something called ill financial discipline. You have witnessed it.

Till next month.
Louis van Assen