Steve Umidha @UmidhaSteve

Plans for a new law making it mandatory for every Kenyan above 18 years to pay Sh6,000 to the National Hospital Insurance Fund (NHIF) annually will open doors for litigation, insurance intermediaries say.

The Association of Insurance Brokers – Kenya (AIBK) argues that  the passage of NHIF Fund (Amendment) Bill 2021 in its current form will see Kenyans and private health insurance providers challenge its enactment.

“Instead of waiting, you almost know what is going to happen…you almost can tell that the people who were not consulted are going to dash to court.

It could be a fantastic idea but lack of stakeholders’ participation will see litigation challenges kick in,” says AIBK’s chair Antony Mwangi in an interview.

Mwangi says that the controversial Bill – currently awaiting Parliament’s approval – will not only expose insurance intermediaries to loss but also push them out of business.

Public Interest Litigation

“The repercussions are unimaginable. But as a lobby we have set up a Committee which is developing a memorandum to be presented to the Members of Parliament (MPs) for a possible assessment,” Mwangi said.

While Public Interest Litigation (PIL) is a relatively new concept in Kenya and its development has been hampered by the restrictive interpretation of standing taken by the Judiciary in a number of cases – the law allows for the general public or class of the community with pecuniary interest or some interest by which their legal rights or liabilities are affected to move to court for legal interpretation.

AIBK in its list of proposals now wants its members allowed to develop protection covers in consultation with insurance firms as a way to help increase insurance uptake and boost premiums, with the latter now under threat from the aggressive bill.

Traditionally, insurance intermediaries have been categorised as either insurance agents or insurance brokers.

Intermediaries facilitate the placement and purchase of insurance, and provide services to insurance companies and consumers that complement the insurance placement process.

Amendment Bill

Last week the Association of Kenya Insurers (AKI) urged for a review into the National Hospital Insurance Fund (Amendment) Bill 2021, saying its passage could expose more working Kenyans to unemployment and could also expose industry’s insurance premiums segment which contributes slightly over 2 percent to the country’s gross domestic product (GDP).

“The effect will also be felt by the employees in the insurance industry, further aggravating the already bad unemployment situation in the country,” said the Association’s chief executive Tom Gichuhi in a statement.

The controversial bill also faces opposition from the Central Organisation of Trade Unions (Cotu) despite President Uhuru’s rallying efforts to MPs to have the Bill fast tracked saying the bill seeks to boost the government’s quest in achieving the Universal Health Care (UHC), one of his Big Four Agendas.

It is also feared that the bill will see investors opt to move to other countries with less stiffness with AKI for instance urging the bill drafters to provide room for voluntary action by individuals to provide more than the minimum required cover.

What’s worse, the bill is felt would see the cost of providing private medical insurance go up and in turn reduce insurance uptake which has remained quite low despite an otherwise stable market.

Insurance Regulatory Authority (IRA) figures show that in the fourth quarter of 2020, general insurance premiums amounted to Sh130.84 billion, while medical and motor insurance classes maintained a leading position in terms of contribution in general insurance business premium at 33.0 per cent and 34.4 per cent, respectively.

Previous attempts by insurance industry experts to restructure the country’s largest medical scheme have hit the wall – with the fund largely viewed in the public eye as a ‘cash cow.’

Experts feel that the bill does not offer protection to taxpayers in the event that the fund runs into losses which would ordinarily mean that some of the losses would be transferred to the reinsurer.