Cedric Stephens | National insurance shortcomings
Q: I was surprised last September when I filed a claim under the National Insurance Scheme to learn that my benefit would not become payable until six months later. No one at the Ripon Road or Heroes Circle offices could say why the process took so long. An employee quietly suggested that I contact the permanent secretary in the supervising ministry on North Street. I phoned the Ministry of Labour & Social Security and got the PS's name and contact details. After I was assured that I would get a reply, I sent her a personal email. I never got a response. After waiting for six months, I phoned the Ripon Road office. I was shunted to Heroes Circle. North Street referred me back to Heroes Circle. I subsequently learnt from Ripon Road that the computer system was down. Nobody knew when it would be fixed. Weeks later, I was told that nobody know when my claim would be paid as others made in 2013 were just being processed. Is there anything that I can do?
- C.D.F., Kingston.
A: The National Insurance Scheme (NIS) is a form of social insurance. It is a programme whose risks are "pooled" and managed by a government organisation that is "legally required to provide certain benefits". The scheme is legally required to provide certain kinds of benefits that are determined by the Government of Jamaica.
This column deals exclusively with insurances that are sold by private companies but I decided to use today's column to publicise the runaround that you, and, possibly, hundreds of other persons are experiencing in the hope that something will be done to deal with the underlying problems.
There are many differences between private and social insurance programmes. Four of the main ones, according to Wikipedia, are:
- Private insurance places more emphasis on equity between individual purchasers. Social insurance places emphasis on the adequacy of benefits for all participants.
- Participation in private-insurance is voluntary. When coverage is mandatory, as is the case with motor insurance, consumers usually can choose between insurers. Social insurances are compulsory.
- Rights to benefits in private insurance arrangement are contractual. These entitlements are set out in the insurance policies. Insurers do not have a right to change the coverage before the end of the contract period (except in a case of non-payment of premiums) or to terminate the coverage without giving notice. Social insurance is based on law. Rights to benefits are statutory rather than contractual. Benefits can only be changed by law.
- Individually bought private insurance, generally, must be fully funded. Social insurance programmes like the NIS are often not fully funded even though employees and employers contribute.
These distinctions are important. If one is to understand why the 50-plus-year-old NIS is doing such a very poor job for you and thousands of other persons, these factors must be appreciated.
NIS management, on the other hand, in spite of the many examples of inefficiency, believes that the scheme is protecting "the most vulnerable" in the society. Seriously? Management does not appear to have a clue about protecting the vulnerable.
Contrast your experiences with mine a few days ago. Mine occurred at Tax Administration Jamaica's Constant Spring Road office. It was the first working day of government's 2017-18 financial year.
The end of a quarter when it coincides with the start of a new accounting period is a very busy time. Knowing this, I had planned to arrive at the office before it opened for business. I did not get there until 10 a.m.
I drove around for about 10-15 minutes trying to obtain parking. When I got inside, my watch said 10:15 a.m. The floor was filled to capacity. Customers were everywhere. Nearly 50 persons were in the line ahead of me. When my transaction was completed, I had spent much to my surprise less than one hour inside the building.
The absence of information is another symptom of poor management at the NIS. There are no financial statements available to members of the public showing, for example, the status of the funds, total contributions, where the funds are invested, operational costs, and the investment returns.
Secrets of state
Presumably, the actuary's report and other details are secrets of state. The total value of the funds under management amount to about $80 billion.
Contrast the absence of important details about the NIS with the 120-page, internet-accessible, audited financial statements of the National Housing Trust, which is also funded by employers' and employees' contributions.
If after five decades of operation, NIS management has failed to address basic customer service issues and disseminate important information about the performance of the scheme, is the investment performance of the funds under management, likely to be sub or above par?
The management of the employer-employee-funded government health plan has been outsourced to the private insurers. Shouldn't the authorities be examining the feasibility of doing the same with the administration of the NIS?
Are the managers of the NIS ignorant of the progress that has been made at the Registrar General's Department and Passport and Immigration Control Authority over the last few years?
Are the folks in the Office of the Prime Minister aware of the situation?
- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: email@example.com