Columnists Features

WCFCB revenue generation system

NAMAKAU Kapiya, my former classmate in the early days of our journalism experience, and now a renowned broadcaster, public relations practitioner and business executive, asked me to share information about revenue generation in the workers’ compensation system.
This was after our inspectors gave her an assessment notice with figures she did not appreciate.
No one gave her information on assessment before she received the notice and she was expected to comply with the law anyway.
To address stakeholder concerns such as Namakau’s on assessments especially, we shall be going forward, publish in the national press, assessment rates for each industry before the commencement of our financial year, for instance effective April 1, 2015 to March 31, 2016.
We shall affirm our commitment to upholding the principles of good governance, which require, among others, things that we provide information to our members and the general public on issues such as benefits, compliance and other services provided by the Workers’ Compensation Fund Control Board (WCFCB).
We realise that the public, and more particularly, our members, have a right to know how the WCFCB functions in so far as raising revenues and subsequently making payouts or expenditures are concerned.
As a result, the information surrounding the subject today relates to a key activity of the WCFCB revenue generation system otherwise known as assessments. Readers may wish to know that WCFCB’s primary source of income is assessment raised from employer contributions and returns on investment of surplus income.
Unlike the revenue generation system prevailing in traditional pension schemes, no amount of money is taken out of a worker’s salary to finance the workers’ compensation system. The system is financed 100 percent by employer contributions (assessments).
The WCFCB’s assessment rate setting system is based on a system of collective liability and experience rating. The premiums employers pay go into the accident fund, which collectively, is used to pay the benefits of injured workers.
Employers pay premiums or assessments, based on the level of risk associated with the industry they are involved in and their own individual claim experience.
Understandably, employers in the mining and quarrying industry pay higher assessments than flower shops due to the higher costs associated with those industries.
In simple terms, employer assessment rates are calculated by factoring the employer’s own injury experience and the collective injury experience of other employers who share the same level of risk.
Each year, the WCFCB sets assessment rates for employers. Assessment rates are calculated by examining the costs associated with a particular employer over the preceding 12 months.
There are two kinds of costs: direct costs comprising wage-loss, medical aid and rehabilitation expenses paid to the employer’s injured workers; and indirect costs which include the costs of running the workers’ compensation system that cannot be apportioned to any one claim, for example administration.
These, along with a calculation representing the collective injury experience of employers with comparable risk, are used to determine an employer’s assessment rate.
The author is Workers’ Compensation Fund Control Board corporate affairs and customer services manager. Email:

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