Insurer offers cash reward for healthy customers

In the recent past, medical insurance has been on a downward trend with most industry players recording losses. And while this has pushed some players to their wits end, a few have instead become more innovative. One such medical insurer is AAR Insurance.

Dubbed Pro-Activ, the product is meant to dissuade medical policyholders from frequently visiting hospitals and instead take care of their lifestyles such as through exercise and eating well. “The less time you use your medical card, the higher your chances of getting a refund,” said AAR Insurance Managing Director Caroline Munene in an interview with Weekend Business. Munene said such a product has been in use in South Africa and it has been effective. “We realised people were paying money. But nothing was being left for the insurer and the client,” she said.

As at March 31, medical insurers had received Sh9 billion in premiums. However, they remained with only Sh375 million as their total underwriting profits after paying commissions and claims and other management expenses.

Although medical insurance did not suffer losses in the first three months of this year, increased claims and management costs cut a huge chunk of underwriting profits. It remains to be seen whether medical insurers will break-even at the end of the financial year.

Last year, the entire industry reported a total loss of Sh225 million between January and September. Thirteen medical insurers suffered losses in that period, with the rest getting razor-thin underwriting profits.

Last year, AAR made a profit of about Sh20 million from Sh3 billion gross premiums the company had underwritten. About 68 percent of total premiums went to settling medical costs, 18 percent to management expenses, 10 percent into paying commissions and two percent to re-insurance.