NAIROBI, Kenya, Mar 18 – Tight regulations in the medical insurance sub-sector have helped to instill confidence among the general public which has in turn encouraged more people to seek health insurance.
Although many players feel that the market is over-regulated, Resolution Health Chief Executive Officer Peter Nduati said on Wednesday that this trend had helped to safeguard the interests of the public who were affected in the 1990s when many health maintenance organisations collapsed.
The Insurance Regulatory Authority (IRA) which oversees the operations in the industry recently started enforcing new rules as outlined in the Insurance Amendment Act which among other things gives the Commissioner of Insurance powers to fire a CEO of a Medical Insurance Provider (MIP).
“Yes, you have to complete many forms and answer a lot of questions but when you look at the IRA, you can tell that they are not doing it out of malice. When for example they say that your solvency ratio is over 56 percent and that most of your assets should be in liquid form, it means that you can meet your liability quicker,” he explained.
In the 1990s, there were no adequate laws and regulations to control the people getting into the business and risk management practices were not followed. Governance issues thus cropped up and saw these firms go under with millions of shillings owed to the public.
In a bid to change that, Mr Nduati said IRA had been carrying out surprise audits of the MIP’s records but this had not affected their business.
“We are seeing a trend where they (IRA officials) come in the morning just as you are reporting to work and they’ll ask you to give them your management accounts for the last one month to check solvency ratios. Sometimes they will write and say “give me the current statement of the top eight hospitals in the country”.
Tight controls coupled with the rising cost of health care and the waning ‘harambee’ culture had helped drive the rising awareness of the necessity of medical insurance. Mr Nduati said that many players see this low uptake of medical covers as an opportunity for them to grow.
Resolution Health has already positioned itself to tap into this market and plans to enhance its service delivery by for instance installing an IT system that will see them reduce the number of days it takes to process claims from 14 to one.
The market does not have accurate statistics on how many people actually have medical covers and the industry always works with estimates.
Mr Nduati however disclosed that the Medical Insurance Providers Association of Kenya, which was formed two years ago, plans to conduct a survey which will among other things inform the sub-sector’s market size.
