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ACTUARIAL EVALUATION AND REVENUE

DAY 3 DISCUSSION GROUPS BREAK AWAY SESSION 01-08-2013. ACTUARIAL EVALUATION AND REVENUE. DISCUSSION AREAS. 1. Financial evaluation and audit 2. Revenue generation AIM: Propose how to go about the following: Tender preparation for actuarial evaluation – terms of reference

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ACTUARIAL EVALUATION AND REVENUE

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  1. DAY 3 DISCUSSION GROUPS BREAK AWAY SESSION 01-08-2013 ACTUARIAL EVALUATION AND REVENUE

  2. DISCUSSION AREAS 1. Financial evaluation and audit 2. Revenue generation AIM: Propose how to go about the following: • Tender preparation for actuarial evaluation – terms of reference • Apportion liability to different accounts.

  3. 1. ACTUARIAL EVALUATION Background: E& Y previous evaluation report • No working papers & generally not released- Risk management practices • Request to get more details of the evaluation even if not working papers • The report indicates that there was very little if any input from the people who understand / who do the job • Cannot lump together other diseases- need technical knowledge of the matter e.g. whatever they are working with, pneumoconiosis vs. TB. • TB liability not calculated correctly • Disconnect between methods used and assumptions in results

  4. ACTUARIAL EVALUATION Moving Forward • Can build in Terms of reference (TOR) when preparing tender documents- and state upfront more details will need to be provided in the report, and exactly what details. • Time set aside for people who will work with auditors in future • Input into the process rom people with institutional memory and who understand all the processes and actual systems used. • Peer review like process- draft report reviewed internally by a committee to be set up by Commissioner, and based on that a final report will be prepared • Previous actuarial reports were done by one company, was there an option of using that same company as it had save data already. Procurement processes would not allow a single service provider system .

  5. ACTUARIAL EVALUATION WAY FORWARD CONT Scoping the project- will require a collaborative meeting. Who should be part of a collaborative meeting preparation. • Important to be build in tender requirements upfront otherwise requesting afterwards incurs extra cost • Consideration that firms try to manage reputational risk, therefore : a) plan a collaborative meeting with an actuary to draw up requirements b) prepare tender documents c) state intermediate process – specified upfront- after work has been done, interim report to be discussed with client for input before final report is compiled. • Too much information missing, an actuary cannot do much: statistician or epidemiologist to assist with how to handle that information, possibly look at combining databases [TEBA, mineworkers, mBOD databases].

  6. OPTIONS PLAN A- Evaluation within a year • Not ready, too many data gaps. Might get regurgitation of same reports as previous. • Will be ready after ds has been quantified. actuaries could help right at the beginning with ds quantification. • Suggestion: Clean data in the next 6 months &get an evaluation done as this is set to happen at a specific time. • Too much of a risk in changing law &having no evaluation done. • Evaluation must go ahead even if data incomplete. • The more this process is delayed, the more cannot find out what liability is. • Might be worth using the worst case scenario: maximum payable for 2nd degree and work with that. • From this process we will be risking being held by a specific number/ figure from an audit process. • Might not be able to provide E&Y with something new/different in 6months time. • Can an audit be moved/ postponed? • Auditor General major stakeholder, problem with this is that there is a liability!

  7. OPTIONS PLAN B • Put some plans on the table, and cleanup if possible within 3years • Hard work to focus on transforming the system. • Ready in 2/3 yrs’ time then put out a tender (by that times files will be sorted, backlog cleared, etc).

  8. OPTIONS PLAN C Commissioner and Health Team – get on with service delivery b/c run out of time. • Round table stuff backed up with theoretical framework with team of experts: best estimates of disease quantification and quantification of liability. • structured process or theoretical process, stakes are high in structuring liability. This will warrant higher level intervention: 1) Government . 3 ministers: Finance, Health and DMR. 2) Employers- who will fund liability-246 controlled mines 3) Unions as stakeholders • This theoretical group- 6/9 months work: • Disease quantification- expert group- what goes to which account. Output: how much of what and technocrats will handle how to raise funds. • Liability- theoretical liability (? What goes to which account)

  9. 2. REVENUE 1st get TOTAL COST FROM the following: • Proper evaluation of the compensation fund • Cost of administration • Cost of services (BME) 2ndly get to why? Risk assessment and implications of following each one of the options 3rd- Decide how to fund costs: • state account • interest • Levies • MODEL putting forward with amendments to the act. • Determination of benefits- what the benefit comprises lump sum vs pension • Low fence for disease- 35% impairment • COIDA like MODEL, criteria!(Financially very important bc of legacy issues. )

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