In Kenya, the insurance sector premiums (according to lobby AKI’s report for 2016) topped Sh197 billion with the short-term insurance premiums amounting to Sh123 billion and an underwriting loss (general and medical business) of Sh2.13 billion.
Electronic claim filing, payment options, and web-based tools will allow providers and health care consumers to manage their health care more effectively than traditional paper-based systems.
Insurance companies also need to provide online tools to help patients manage their health care and make informed health care decisions.
Africa’s insurance sector remains under-developed generating barely 1.7 per cent of global insurance premiums despite its being home to 15 per cent of the world’s population, a high economic growth and an emerging middle class with higher income and desire for a better quality of life.
Whereas other sectors have benefited immensely and capitalised on these favourable economic factors, the low insurance penetration in Africa is due to a wide variety of factors, including regulatory factors, market structure, lack of development of other segments of the financial sector, social/human development factors, and cultural/religious factors.
In Kenya, the insurance sector premiums (according to lobby AKI’s report for 2016) topped Sh197 billion with the short-term insurance premiums amounting to Sh123 billion and an underwriting loss (general and medical business) of Sh2.13 billion.
Whereas some focus and regulations have been put in place to support the general insurance business — think of marine and motor rates regulations — the current neglect by the regulator has left medical insurance bleeding in losses.
A sector that is supporting the government’s universal health agenda should be fully supported by the government.
The medical insurance losses are driven primarily by operational costs, fraud, price undercutting and drug costs. No single silver bullet can solve this traditional drivers but steps can be taken to minimise the impact of each of this. Understanding how the medical insurance players operate will help highlight some of the short-comings in this sub-sector.
Operations are manual
I recently attended an industry forum and almost every medical services provider complained about late or non-payment of medical claims by insurers. What they didn’t understand is the processes through which the paper claims submitted to insurance companies have to go through before they (the service providers are paid). For instance, in 2016 about 10 million medical claims (approximately 40,000 claims per day) were presented to private insurance companies in Kenya.
Each claim form is accompanied by an invoice (or several invoices depending on the provider and the services given) and most likely a prescription or lab test request form - averaging four pieces of paper per claim. Between the top 10 medical insurance companies, they receive about 150,000 pieces of claims in paper per day that they need to pay against policy rules agreed on with the customers.
It doesn’t end there. The information in those pieces of paper is recaptured manually into the insurer’s systems before payment can be made. These can take days / or months depending on the resources available and the insurer’s systems capabilities! If you are lucky, all your claims will be processed and some paid. Chances are that some of these claims may end up being misplaced or incorrectly captured- hence the delays in payments.
Very little validation is possible due to time pressures for payment. This in itself allows fraud to flourish. Legislation that will compel insurance players (insurers, intermediaries and medical service providers) to automate their operations will help streamline the sector. For instance, imposing a fine for use of paper claims/ invoices will compel hospitals to move quickly to support electronic submission of claims to insurance companies.
As a country we need to have standardised coding for diseases, procedures, drugs and any other related services and set baseline prices for the same. Legislation to also control the use of branded versus branded generic drugs need to be put in place and supported by technology.
Electronic claim filing, payment options, and web-based tools will allow providers and health care consumers to manage their health care more effectively than traditional paper-based systems.
Insurance companies also need to provide online tools to help patients manage their health care and make informed health care decisions.
The new generation national identity cards can be linked to a centralised healthcare platform that will help healthcare professionals provide better health outcomes. Insurance companies’ access to this data will help in pricing and reduce price undercutting.
To the government, this is an opportunity to collect rich data regarding the population for future planning. This information can be shared with potential investors that will help bring in more investors and thus spur growth.
