When insurance turns into a bad gamble

Michael Odero is a sad man. In 2012, his young daughter was knocked down by a motor vehicle and unfortunately died.

"I took up the case with, an advocate practicing in Kisumu where the case was registered at Winam Court in Kisumu. After appearing in court twice for hearing between May and August 2013, my lawyer advised me to sit back and wait as he does his work and that I would be compensated. However, towards the end of 2013, he kept off communication and also turned down most of my appointments with him." He recalls.

However to his surprise, Michael later discovered that his the advocate had already negotiated with the insurance company UAP, in which the insurance paid out Sh2.1 million.

"After pull and push with my advocate for a year, he informed me that the out of court settlement was KSh250, 000. I doubted the amount and told him to show me the agreement and payment documents which he declined. In December 2015, he deposited KSh151, 200 to Winam Court and told me to go and pick it there, and out of frustration I went to court where I was given KSh149, 700.

I also learnt that the case was not terminated officially as the file is still open. I seek your intervention to help me get my right from the lawyer and the truth about the payment as UAP Insurance has also declined to show me any payment documents." He told the Nairobian Defender.

The Nairobian Defender took up this case and is still pursuing it. Michael is not the only one facing hurdles when it comes to compensation from insurance companies. Tales of how people have been duped into buying policies that later end up not meeting the rosy picture that had been painted during the signing up period continue to flood social media, with people seeking justice.

When Philip Jack Natunga bought an insurance policy in 2011, his plan was to continue with the stipulated contribution of Sh3623 each month until its maturity.

Upon maturity, he was to receive the total amount contributed plus an interest as final payment to this investment.

Unfortunately however, for Jack this was not to be. Jack lost his job in February 2013, long before his policy matured. This then meant that he would not be in a position to keep contributing the Sh3023 monthly remittance. He informed his insurer about the situation and requested for the policy to be terminated and be given a refund of what he had contributed by that time.

Up until that time, 2013, Jack had contributed up to Sh68,837.64.

"I then talked to my agent who is based in Nakuru about my situation but she has not helped me at all. I just want to surrender the policy and get my money back. I went to their Bungoma office and they told me they have nothing to give me as a surrender value. Please help me," Jack pleaded with the Nairobian Defender seeking to be helped get his money back.

Some insurers claim that sometimes this happens as a result of failure on the part of the policy holders. "Sometimes, customers do not take time to read the fine print of their policies, and get into difficulty when the stop paying premiums," said Mr Francis Muriuki, of Britam.

What then can potential policy holders do to ensure they get the best out of their policies? This is not to say that no one ever gets compensated when a claim is placed. The case of Dominic Owuor comes to mind. He insured his motorbike with Xplico insurance. But the motorbike was later stolen, an incident he immediately reported to the police, obtained an OB number and presented a claim to the insurance company for compensation. However the speed at which the company was communicating to him about the matter, had him worried.

This is why he sought the help of defender to get the process fast tracked.

"I tried calling them and going to their office all are in vain. Instead they are giving me empty promises mpaka nimechoka. I was given offer letter by 05.02.2016 but up to now I have not received my compensation," he said.

After the intervention of the Defender, Owuor was eventually able to get a refund of Sh80,500 from the insurer.

The insurer noted that the delay was caused by miscommunication between the two parties.

"We did look into the matter and confirm that the cheque was lying at our offices awaiting collection by our esteemed customer or their insurance agent. Inadvertently, there was miscommunication that led to delay in collection of the cheque," the insurer noted when contacted by the defender.

So what is it that the policy holder needs to know before taking a cover that could potentially end up becoming a sinkhole for their finances?

According to Insurance Regulatory Authority (IRA) Communication Manager Noella Mutanda, it important for an individual to identify the need they are trying to take a cover against, and do thorough research on it.

"Most people just take what insurance agents tell them as gospel truth. Therefore no one looks out for the client's safety when sighing up for these policies," she says.

Agents are paid on commission depending on the number of people they have signed up for any cover. And therefore they go out signing in anyone who is willing for the covers. Sometimes this is done in haste and the insured ends up taking a cover they either no not need or one that does not cover what they intended. An agent explains how this works.

"I signed up someone for a health cover, and they have faithfully remitted all their policies but when my client went to the hospital to deliver, her maternity cover could not be compensated. This is because she personally chose to undergo caesarian section instead of the normal delivery, a cover she had not taken when signing up for this policy," revealed Joy an insurance agent.

According to Joy, most clients do not reveal their intentions for taking these covers and do not read the terms and conditions of these policies.

"So it becomes a problem when they make a claim and the insurance company cannot pay the claim," she says. "Had I have known that this is what she was looking to cover, I would have given her a policy that allows for elective CS," she said.

It is also common for individuals to dismiss the small print titled Terms and Conditions that are written in very small fonts on these policy documents and with words difficult to understand.

But Noella says that IRA has since 2013 standardised the font size of the policy documents to ensure that it is legible to everyone.

"We formed a taskforce that ensured that all insurance companies have simplified the wordings in these policy documents and are in reader-friendly font sizes." Noella noted.

She advises individuals to be very keen with the people who approach them selling policies. And to check and cross check again before making any haste decisions.

"When you are approached by an agent to sign up for a policy, it is very important that you check if their license is still valid. Licenses are renewed on a yearly basis and it is mandatory for all agents to have their licenses if they are to sign up clients," Noella said adding that insurance companies are penalised if their agents are found operating without valid permits.

Sidebar: Ensure your insurance agent is not a quack

According to the Head of Corporate Communications at Britam Insurance Ms Victoria Miguda-Bonyo, There are many important points which a policy holder much check before buying the policy and after receiving the policy document.

The insurance holder must ask themselves these questions before taking any cover.

"Am I adequately covered in terms of the value at risk? Are all the perils to which I am exposed to, covered in the policy? Is the policy period correct? Is the premium amount shown on the policy cover accurate? Is the deductible accurately captured in the policy?" advised Ms Migunda adding that the insured should also go through the policy terms and exclusions to be fully aware of what is covered and what is not covered in the policy.

Migunda says that while buying insurance one should focus on adequate coverage and the quality of services rather than saving on premium.

"Focus on cheaper cover can lead to miss selling by the agent leading to problems in claims," she said.

IRA Has been carrying out a countrywide training to Kenyans on what to look out for before committing financially to these investments. Using quick fix shortcuts has been discouraged when one is trying to sign up for these policies with agents. Agents represent the client but can easily take advantage of the ignorance of the potential policy holders to make them sign up for policies that will eventually not help them.

"Most people tend to opt for the back door policies that could potentially end up not meeting the intended need," Mutanda warned.

So what could make a policy holder fail to be compensated by an insurance company after making a claim?

"The insured needs to be aware of difference between compensation of loss and indemnification of loss. The actual loss can be higher than indemnifiable loss because many a times reinstatement of damaged property can lead to betterment for which the policy does not pay in a contract of indemnification. Similarly loss on account of policy deductible cannot be compensated." Migunda explains.

Noella advices prospective policy holders to personally fill in the proposal forms for a policy they intend to take to ensure they fully understand what is expected of them.

SIDE BAR: Got a complaint? Here's how to go about it

Noella says that a potential Complainant needs the policy document used to open the policy, receipts as proof of payment of policies, Contract, pay slip (where applicable to show deductions) and other relevant documents that can play a role in strengthening the case.

It will not cost you to make a complaint to the IRA over a dispute regarding any policy.

In case of disputes, IRA has steps that need to be taken by the complainant to get a hearing on the matter.

The complaint or dispute should always first be taken up in writing with the Insurance Company or any other registered member thought to be at fault.

As a general rule, complaints and disputes should usually be made in writing to the Insurance Regulatory Authority within three years of the act or omission complained about or disputed. If you did not know about the matter at the time, the three years will run from the time that you knew or ought to have known about the act or omission. IRA does not handle cases that have already been taken to court. 

Sidebar: Hustlers need health insurance most

New National Health Insurance Fund (NHIF) CEO GEOFFREY MWANGI explains to JECKONIA OTEINO why he targeting musufferers to sign up for medical insurance

What is the status of NHIF currently?
The key thing is that after the rollout of the new contribution rates we are giving broadened coverage including premium packages. Since it is a social health insurance which is mandatory for everyone in the formal job sector and voluntary for Kenyans working in the informal sector, more people are benefiting from surgical packages up to a maximum of Sh0.5 million; dialysis twice weekly at a maximum of Sh9,500 each; chemotherapy and radiotherapy for cancer patients; kidney transplant up to a maximum of Sh0.5 million and now we are working on how to have a testing package. 

What new areas are you focusing on?
We are enhancing local capacity to handle heart conditions. Many patients have heart conditions and this has led to a backlog and long queues at Kenyatta National Hospital. NHIF is therefore financing patients for treatment at select hospitals across the country to reduce the pressure on KNH. Currently, there are 940 cases that need surgery and we are engaging Karen, Mater, Coast Provincial General, Gertrude and Tenwek hospitals to handle these cases. It is an area we are taking seriously.

Free maternity funds have been channeled through NHIF, how will this work out?
NHIF has over 50 years of experience in managing health insurance claims. When one gets pregnant, they register through a mobile platform then they visit a clinic which informs NHIF. Upon delivery, we reimburse the health provider. So far 2000 mothers have registered. We are also still holding health executives from the counties on how to make it better.

What's your plan for the informal sector?
The informal sector has 12 million people who need health insurance. We have seen cases where families have to sell land and property to pay or medical care and this can be avoided with enrolment and contribution to NHIF. It is an area we are focusing on seriously and we will push to register more people in this sector because of what they stand to gain when health issues arise. Each person should have a package.

How accessible is NHIF to Kenyans around the country?
NHIF currently has 93 outlets all over the country and major towns. At least each county has an outlet which makes service access possible for most Kenyans enrolled with us. With technology, serving the public is even easier.