The National Health Insurance Fund (NHIF) is on the spot over its decision to float a tender for the provision of insurance cover for 120,047 civil servants and National Youth Service (NYS) staff against the advice of the Ministry of Public Service, Gender and Affirmative Action.
The ministry favoured a renewal of the existing cover for a year while NHIF insisted on a three-month extension. The decision to advertise the tender runs the risk of the government having to pay higher premiums at a time the country is struggling to finance its operations.
On Tuesday, NHIF placed an advertisement in the media inviting bids for the provision of co-insurance and facultative insurance services for Group Personal Accident (GPA) and Work Injury Benefits Act (Wiba) for civil servants and NYS staff. The scheme will run from July 1 to June 30, 2024. Prospective bidders are to submit their applications by June 14.
“As you are aware, this State department wrote to you on extension of the cover for the next one year,” Public Service Principal Secretary Amos Gathecha wrote in a May 12 letter to NHIF acting CEO Dr Samson Kuhora.
The PS noted that since then, NHIF had insisted on extension for three months as it prepares to do a more comprehensive contract for one year.
“The IRA [Insurance Regulatory Authority] wrote to us on April 26 and advised that the cover be extended for one year to avoid the government being disadvantaged with higher premiums,” the PS said in the letter.
The letter was copied to Chief of Staff and Head of Public Service Felix Koskei, Cabinet Secretary Aisha Jumwa and IRA boss Godfrey Kiptum. On February 14, Mr Kiptum notified then NHIF CEO Peter Kamunyo that IRA had noted the intention to extend the cover for a year and gave him the go ahead. But NHIF went ahead with the tendering process.
By June 30, NHIF will owe commercial insurance companies at least Sh6.9 billion, which will increase to more than Sh13.8 billion in insurance premium debt once the advertised scheme rolls out. This will effectively push NHIF’s pending bills to over Sh30 billion, which includes outstanding hospital bills.
Questions are emerging on why NHIF deemed it fit to seek for an open tender insurance cover for its staff but subjected civil servants to a consortium tender. Its staff were previously on consortium covers.
What NHIF also needs to clarify is why it is seeking for medical cover for its board of directors in the open market, yet it wants to block civil servants and NYS staff from doing the same.
By going to the open market to source an underwriter for its staff, NHIF clearly denies itself the much needed income required to finance its operations.
NHIF further has its Group Life, Last Expense, Wiba and GPA insurance provisions open to the market through insurance brokers but wants civil servants and NYS staff catered for by a consortium of five co-insurers, 10 facultative reinsurers, lead co-insurer and claim administrator.
