Equity Group-backed medical franchise has ventured into pharmaceuticals as it seeks to lower the cost of drugs and pass the savings on through reduced insurance premiums, giving it an advantage over other insurers.
Equity Afia has opened its first Equity Afia Pharmacy branch as it pilots entry into a business that accounts for about half of the clinics’ operating expenses.
Equity hopes to leverage savings from the pharmaceuticals venture to deepen its presence in the insurance industry through lower pricing.
The company operates in the short-term insurance segment through its subsidiaries, Equity General Insurance (Kenya) Limited and Equity Health Insurance (Kenya) Limited.
“We are piloting our first pharmacy, the Equity Afia Pharmacy so that we not only make access to doctors affordable and accessible, but we ensure pharmaceutical commodities are affordable,” said Equity Group chief executive officer James Mwangi.
The move comes at a time when patents for many medicines are expiring, allowing the production of cheaper generic alternatives.
High drug prices and the infiltration of counterfeit medicines remain key challenges in Kenya’s healthcare sector.
Equity joins a growing number of insurers establishing in-house pharmacy outlets to control costs. CIC Insurance Group operates CIC Pharmacy Limited to sell medication directly to policyholders, while AAR Insurance runs AAR Healthcare Limited.
Cost control
Equity Afia clinics are franchised to doctors whose medical training was sponsored by Equity through its Wings to Fly programme.
Under this model, Equity directs patients under its medical cover to these clinics, which charge lower prices, while its insurance arms process payments faster, creating a mutually beneficial system.
Equity staff are required to use Equity Afia hospitals as the first point of care before referral to other facilities if escalation is needed. Equity Afia has 146 outlets in Kenya and four in the Democratic Republic of Congo.
“One of the things that gives us an advantage is the partnership with Equity Afia. With Equity Afia, outpatient costs usually are between Sh8,000 and Sh10,000 and, for a health cover, outpatient on its own is 50 to 60 percent of the cost – so it’s a big driver. Equity Afia at the moment is delivering full outpatient care at 40 percent lower than the other providers,” Angela Okinda, an insurance executive at Equity, said.
“So when [we] get the pharmacy game right it will be great news for us because pharmaceuticals contribute about 50 percent of outpatient cost so once you control it, even by 10 or 20 percent, you can imagine the benefit,” she added.
Margin squeeze
The medical insurance business has posed challenges for underwriters due to thin margins.
Old Mutual Group disclosed it exited medical contracts worth Sh1.3 billion due to low profitability.
According to the Insurance Regulatory Authority (IRA), the claims ratio for medical insurance stands at 75 percent, leaving insurers with 25 percent to cover operational expenses and profit margins.
Hospitals often prescribe additional tests for insured patients and charge higher rates for services, citing delays in verification processes that can push payments out by up to three months.
Equity’s insurance division, which began operations three years ago, reported a gross profit of Sh2 billion for the year ended December 2025, following a 75 percent rise in gross written premiums to Sh9.17 billion.
Medical insurance remains a key driver of the business, with the group enjoying wider margins than industry peers, supported by its partnership with Equity Afia outlets.
