By Kahawa Tungu
As of the 2017/2018 financial year, the National Hospital Insurance Fund (NHIF) had a total of 7,657,463 principal members, who paid monthly premiums.
The number has definitely gone up, owing to new formal employments and new subscribers joining the job market.
NHIF is arguably the cheapest insurer in Kenya, compared to privately run insurance companies.
However, it emerged that the insurer is financially struggling, despite the massive subscription.
An independent investigation by Kahawa Tungu reveals how cartels in the industry have tried to bring down the underwriter, through various schemes and using other underwriters.
First, in a Teachers Service Commission tender issued on August 29, 2019, it was tailored to fit a certain player in the industry with select service providers.
The tender required that the contractor should entail a consortium of agencies registered by by Insurance Regulatory Authority (IRA) as insurance underwriters, Medical Insurance Providers (MIPs) and Brokers and Actuaries firms registered by Actuarial Society of Kenya (ASK).
Being a state insurer, NHIF is not registered with IRA, making it to be edged out in the Ksh12 billion tender.
NHIF was also barred by IRA in October 17, 2017 from offering Insurance services after tendering for the police insurance tender.
“The Authority (IRA) brings to your attention that only persons registered under the Insurance Act are authorized to carry on insurance business. The National Hospital Insurance Fund (NHIF) is not registered under the Insurance Act and as such is not authorized to carry on insurance business,” noted IRA in the letter signed by Commissioner of Insurance Godfrey Kiptum.
This seemed to have been the initial blow to remove NHIF from the insurance industry, even as the monied cartels started elbowing other insurers out of the scene.
“The consortium (Contractor) shall work jointly and submit one bid document (tender) for the purpose of the provision of Teachers Medical Insurance Covers. The consortium members shall jointly or collectively submit a declaration letter undertaking to work together. The letter must be collectively signed and stamped by all parties,” TSC tender documents in our possession read in part.
This writer understands that the request for capitation services are only provided by one service provider Clinix, GVS, Nairobi West Hospital, all belonging to the same family of Dr Saini with his son Jayesh. This automatically favors one person.The aforementioned facilities have been working with Minet Insurance Brokers and AAR Insurance for medical.
A Capitation Provider is an entity which has its own network of health facilities and network of empanelled health facilities willing to treat patients on an annual capitation fee for specified services and having its own medical administrators for managing empanelled health facilities.
The bid bond was Ksh180 million, which was very high for majority of the brokers. Minet being the biggest insurance broker easily effected the bid bond.
TSC also asked for brokers with actuarial employees, this is only AON and Minet that has that. They also asked for firms with real time online platform of online data update, and only Minet has the system that they developed when they were given or worn the tender.
TSC also asked for firms with experience of management of schemes above 500,000 lines. The only broker or organization with this is NHIF and Minet since they have civil servants/ Police /TSC medical schemes that are the biggest in the industry. In this however, it means that NHIF was already out of the picture.
However, such covers have always caused hiccups in service delivery, as clients are denied services in case the government delayed in payment of premiums.
After complains were raised over the TSC and police medical covers and poor services by then the umbrella tenderer AON, Minet and AAR insurance the Cartel led by Jayesh Saini have changed tact now instead using AON and Minet as the administrator the group registered a medical administration company called Medical Administration Kenya Ltd with the current CEO of Minet Mr Sammy Muthui having hidden interest together with Jayesh. Jointly they have in cooperated Jubilee Insurance with former KWS CEO Julius Kipngetich being in the loop.
During governor Evans Kidero’s time, Nairobi County got proposal of Ksh800 million package for its staff but they they chose private insurers at a cost of Ksh1.4 billion.
Early this month, the National Police Service announced a new medical cover tender for the 131,151 men and women in blue, which seemingly was copied from TSC’s tender documents.
“The eligible insurance underwriters shall comprise of a consortium of not less than two and not more than three insurance companies.The Insurance consortium shall be required to appoint the actuarial firm and a Medical Administrator who will form part of the tender,” reads in part the tender documents from NPS.
Also, tenders must be accompanied by a bid Security of Ksh100 million inform of bank guarantee from a commercial bank licensed by the Central Bank of Kenya or from an insurance company approved by the Public Procurement Regulatory Authority (PPRA) valid for 300 days from the tender closing date and time.
The tender is set to be awarded to the same consortium, since no other firm will qualify for the same.
“Once the tender (police medical cover) is awarded to Jubilee Insurance as planned the money will be offloaded to medical administration Kenya ltd. Jubilee Insurance will remain with small percentage like 20 percent and small amounts paid to CIC and Madison,” says our source.
Last year, the Independent Electoral and Boundaries Commission (IEBC) handed medical insurance cover tender to Jubilee Insurance through uncouth means, by blocking other insurers in a process that entailed kickbacks and corruption.
According to a letter written to anti-graft agencies in our possession, the deal was hammered in boardrooms and high-end hotels with IEBC officials pocketing millions from the deal.
According to the letter, a team from Jubilee Insurance approached IEBC in March 2019, seeking renewal of the tender despite several complaints raised against the insurer. At first, the deal was being pushed by IEBC’s HR, Administration and Procurement departments but was declined by the commissioners.
The HR and administration director Mr Mohamed Hassan, procurement director Mr Harley K Mutisya met Jubilee team led by general manager Dr Patrick Gatonga and corporate sales manager identified as George, in a bid to retain the account at Jubilee. In the company of the Jubilee team was Juliana Njue from the procurement department and and Waweru, who were to work with Njuguna from Jubilee to hack a way forward.
The three were tasked to hack a way forward that would see Jubilee retain the account, amidst heightened competition from different companies that were bidding for the tender.
IEBC uploaded the tender documents on May 10, with new conditions that locked out all the other underwriters, with the aim of remaining alone in the deal.
After several complains from other insurers and in-fightins within IEBC, a new addendum was introduced on May 17, opening a window for other bidders.
Agitated Jubilee Insurance wrote to IEBC challenging the new move by implicating the commissioners led by chairman Wafula Chebukati.
Several firms bid for the tender, with Heritage Insurance floating a bid of Ksh245 million, Britam Ksh244 million, CIC Ksh228 million, Jubilee Ksh218 million, AAR Ksh210 million, UAP Ksh210 million and Madison at Ksh199 million.
At one time in 2018, IEBC was forced tosuspend the insurance cover for employees from Jubilee Insurance, which proved too expensive for them.
Despite several complains to the Public Procurement Regulatory Authority and IRA, no action has been taken to date to deal with the artificially created monopoly, that has seen the state insurer NHIF thrown under the bus.