Insurance providers in the medical field have raised alarm over huge losses they incur due to rising cost of claims by health providers. They say high medical bills are eating into their underwriting profits.
According to figures from Insurance Regulatory Authority (IRA), the sub-sector has for the fourth time in a row recorded losses as healthcare gets expensive.
Figures from IRA show the sector posted a loss ratio of 76 per cent in the third quarter of last year across the 18 firms offering medical insurance. Eight insurance companies do not offer medical insurance, with most fearing the high risk of this insurable interest.
Despite the premiums growing to Sh25 billion in that quarter as compared with Sh22.2 billion over the same period in 2015, losses grew to Sh500 million. 13 of the 18 firms offering health insurance paid more claims than the premiums they were able to underwrite.
They blame the trend on escalating hospital bills and the high incidences of fraud in medical insurance cover, which have eaten into their underwriting profits. Fraud has been a problem for the insurance industry, with reports estimating that as much as 50 per cent of insurance claims paid out are actually falsified.
The East African quoted a 2016 price adjustment by the Kenya Medical Practitioners and Dentists Board which saw the cost of procedures such as maternity delivery (normal and caesarean) as well as charges for general practitioners and consultant increase by 20 per cent from the last review in 2013.
The article also quoted Jubilee Insurance head of medical insurance Catherine Karori as saying that medical service providers were increasing their costs annually by an average of 15-20 per cent. “We are struggling with rising costs of pharmaceutical products, outpatient consultation fees and bed charges. We are now in a dilemma as we are struggling to cover the additional expenses without increasing our premiums,” said Ms Karori.
Despite medical insurance putting in place a number of measures including the requirement by some providers that every policyholder be admitted into the hospital using their biometric details, the vice has refused to go away.
Insurance providers have doubled their efforts to stem the hemorrhage, with some firms such as AAR Insurance coming up with products that discourage the insured from using their cards.