Foundation The General Organization for Social Insurance (GOSI) was created in 1969 by the government of Saudi Arabia. The organization is funded through the deduction of wages of Saudi nationals and their expatriates. The charges are broken down as follows; 2% of gross wages for Occupational Hazards and 15% of gross wages. GOSI consists of eleven board members from the government sector, employers of various companies, and insured persons.
Role GOSI has several responsibilities which include protecting workers from the poverty caused by work injuries, illness, old age, or death directly linked to work. Other responsibilities of GOSI include; collecting a contribution from employers as well as paying benefits to persons with insurance. About 5.8 million workers are covered by the government Social Insurance Law.
Compensations As stipulated in the GOSI portfolio, the occupational hazard on the job is typically an allowance of 75% of monthly wages for injuries, disabilities and old age incapacities. The charged fee is 2% of the average monthly wages multiplied by the number of years insured by GOSI. In case of death of the annuitant, the payment abruptly stops.
Key Features of GOSI GOSI is a mandatory social insurance operated by the government. The contribution is fixed and compulsory to everybody, and the contributions made belong to the government. The compensations by GOSI are based to a person’s monthly wages and ends when the wage earner dies.
Limitations of GOSI There are several disadvantages of GOSI. First, GOSI compensation is geared towards a person’s monthly salary instead of paying the sum assured or accumulated within a given period of time. Secondly, the compensation is paid to salary earner and stops with his death. The plan should pay the wage earner at the time when the plan matures or pay the heirs or beneficiary in the event of death. Thirdly, the money should continue to belong to the plan holder at all times, or in event of his/ her death. In addition, GOSI plan is not flexible as the participants are not in a position to direct their funds to other schemes. Apart from being compulsory and fixed, GOSI does not provide any other benefits to its members. Workmen compensation Insurance The key feature of workmen’s compensation is that it protects both the employer and the employee. Its advantage is that it enables the smallest employer to meet his obligation to provide the statutory indemnities and provide coverage to employees in case of insolvency. It is business-oriented insurance that is geared to providing coverage to medical and injuries linked to work. Under the general plan of compensation, employers are required to pay or provide a prescribed compensation based upon the earnings of the employee for disability or death due to accidental injuries arising out of and in course of employment. The employer has the option of giving security for the payment of compensation by contributing premiums to a State Insurance Fund created by the Act; by insuring with any stock corporation, or mutual association authorized to write compensation insurance. If the employer cannot exercise either of the above options, he is prone to penalties equal to the premium payable to the state fund and is subject to a suit for damages upon the part of the injured employee, or in case of death, by his legal representative or dependents. Key features of Workmen Compensation Insurance In general this type of insurance differs from state to state. In addition, compensation laws differ widely as to the field of occupations that are subject to their provisions. In some states, the law applies to all employments in general. However, other laws apply to hazardous employments named in the statute itself. Its basic role is to compensate the employee’s medical bills and reimburse him or her some percentage of lost wages. The state law has made it mandatory for most companies to carry out the Workers’ Compensation insurance. Hence, some states have geared funds for worker’s compensation while in other states a private carrier carries out this type of business policy (Shawn 5). GOSI is mandatory for all wage earners whereas workman compensation insurance is mandatory for most but not all companies. Workmen’s compensation insurance is seen as a burden, expensive and a commodity product with only basic benefits to the employees. The workmen compensation Insurance is different from GOSI in that it provides different policies and therefore employees have a variety while making a choice. Compensation The average weekly wage of the injured employee is the basis of compensation for injuries and the amount is two-thirds of such wages. Compensation for the injuries which result in either temporary or permanent disability is payable during the continuance of the disability, except for the first two weeks. Every injured workman is entitled to free medical attention for a period of sixty days after the injury. The workmen compensation Insurance also compensates its members in case of death. The death benefits include funeral expenses and a certain percent of the average wages of the deceased workman which is payable only to the persons designated as beneficiaries. Employers’ Liability Insurance This type of insurance protects the company against the cost which results from defending employment-related cases arising from employees for work-related injuries or illness. The Employers’ Liability covers a quarter of a standard workers’ compensation policy. However, the employer is in a position to select an Employers’ Liability coverage that suits company employees. GOSI and Workers’ compensation insurance have several differences. These include, in GOSI compensation is fixed and compulsory whereas in Workers’ compensation insurance compensation is based on the type of illness or injuries (Shawn 7). Workers’ compensation insurance include coverage of employees in states as well as at their place of work, premiums are based on the type of injuries or illness. It also provides funeral expenses and financial support to dependents and a certain percentage of wages is reimbursed unlike GOSI compensation which stops immediately the wage earner dies without even providing financial support to dependents. Disadvantages In workers’ compensation coverage, the employee is subject to price increase as the insurance carriers decide on whether to or not to renew the policy. The employer enters into the private life of the employee. The employer can pressurize the employee to content himself with inferior medical care or resume work before he is thoroughly recovered.
Works Cited
“General Organization for Social Insurance-GOSI”. GOSI government of Saudi Arabia. 2004. Web.
Shawn, Adams. “Risk Management Methods to Reduce Your Workers’ Compensation Rates.” Occupational Hazards 63.11 (2001): 5-7.