Insurers offering medical covers for treatment of Covid-19 paid claims worth Sh1.3 billion between March 2020 and June 2021 during a period when the pandemic wrought havoc top the economy.

Industry data from Association of Kenya Insurers (AKI), says the amount represents a 74 per cent surge in claims lodged by medical insurers, which stood at Sh1.7 billion during the period under review.

The industry report for 2020 further shows that the number of claims lodged stood at 15,522 out of which 3,934 were inpatient claims, while 11,588 were outpatient claims.

“Considering this, not all claims that were lodged during the period March 2020 to June 2021 were paid and this could be attributed to the different scope of covers,” read the report which shows that rejected claims stood at Sh396 million, representing 23.3 per cent of the total claims.

Medical insurance

Last year AKI reported that the medical insurance business grew by 4.58 per cent to record gross written premium of Sh 44 billion compared to Sh42 Billion the industry posted a year earlier.

Claims incurred and total expenses during the period also increased by three per cent and 11 per percent respectively, while underwriting profit increased from Sh204 million in 2019 to record an impressive Sh1.7 billion in 2020.

Over the years, the medical insurance class has performed dismally with 2019 and 2020 only the periods that have recorded profitability with AKI attributing the shift to better management of expenses by insurers.

“Despite the fear of hospital visitation that was witnessed in 2020, the net claims incurred increased by 3 per cent.

As part of its digitisation journey, the AKI secretariat is exploring the possibility of developing a harmonized data sharing platform for medical insurers,” reads the report in part.

When the virus first hit the country in March last year, few Covid-19 patients would have been billed for their hospitalisation owing to the voluntary waivers that had been extended by private insurers, and employers.

But as vaccines have become widely available to Kenyan adults, health insurers like the National Hospital Insurance Fund (NHIF) may no longer feel the pressure to continue waiving costs for Coronavirus treatment.

But as more waivers expire now, more people hospitalised for the disease – the vast majority of whom are unvaccinated – will likely receive significant medical bills for their treatment.

Low penetration

The pandemic led to health, travel and business interruption, coupled with reduced sales volumes and a dip in face-to-face interactions with customers. 

This was a turning point for the insurance industry whose penetration level has stagnated at 2.3 per cent due to inequality in resource distribution, low employment levels, high costs and poor perception of insurance.

Low insurance penetration in the region and increased claims and losses due to fraud, particularly in the motor and health businesses, strained the industry’s performance according to industry regulators.

In April, the Insurance Regulatory Authority (IRA) fingered rising cases of fraud and forged claims saying the vice was eating into profit margins of industry players. 

But recent industry adjustments by the regulator are hoped to help solve some of the challenges facing the sector.