The public procurement watchdog has backed insurers in a protest against the Immigration Department over a restricted multi-billion shilling tender for the newly introduced compulsory medical insurance covers for foreigners visiting Kenya.
The protest follows the tender floated by the State Department for Immigration and Citizen Services on December 20, 2024, seeking underwriters for all visitors to Kenya.
Kenya introduced compulsory medical cover for foreigners travelling to the country for a short stay under the Social Health Insurance Act 2024, which also makes it compulsory for all locals to be registered for healthcare services.
A restricted tender means only the insurers that the State Department will handpick will be allowed to bid for the lucrative business given that the number of international visitors to the country has been rising, growing by 35.4 percent to 2.08 million in 2023. The ministry has not disclosed which insurers it has contacted to bid for the cover.
The Public Procurement Regulatory Authority (PPRA), in a letter to the State Department of Immigration and Citizen Services, warned that the tender for the tourist insurance cover violates several procurement regulations and should not proceed in its current form.
“It is our considered view that the subject tender cannot be progressed to its logical conclusion in its current form and you are therefore required to take due regard of our observations,” PPRA Director-General Patrick Wanjiku said in the letter dated January 9, 2025 and copied to the Insurance Regulatory Authority (IRA).
The PPRA boss further said that the State Department had failed to clarify the conditions that it used to arrive at the decision of floating a restricted tender for the services.
“It is not clear to us which of the conditions provided for the use of restricted tendering method under section 102 (1) of the Public Procurement and Asset Disposal Act 2015 was satisfied,” Mr Wanjiku said.
The Act allows an accounting officer of a procuring entity to use restricted tendering if the goods or services being procured are of a complex or specialised nature and therefore require prequalified tenderers or when the time and cost required to evaluate a large number of tenders would be disproportionate to the value of what is being procured.
The entity opting for restricted tendering is also required to prove that there are only a few known suppliers of the goods, works, or services it is seeking and put up a notice of the intention to procure through this method.
The PPRA’s concerns came in the wake of similar apprehensions by underwriters over the tender.
In a letter to the State Department, the underwriters, through the Association of Kenya Insurers (AKI), requested for the cancellation of the tender to allow for consultations with them and the IRA.
“The insurer’s position is that this amounts to discrimination and that the tender should be opened to all insurance companies licensed to underwrite this class of business by IRA,” the letter signed by AKI chief executive officer Tom Gichuhi says.
AKI says that it is surprising that the tender states that registration with IRA is not a condition for tenderers yet the Insurance Act requires that for an entity to carry out underwriting business in Kenya, it should be duly licensed by the IRA.
The controversial tendering method for visitors’ health cover is in addition to several onerous requirements such as the demand that the bidders be backed by reinsurers rated as top five by global rating agencies like Standard & Poor’s (S&P) or AM Best, partner with third-party administrators and have a contract with a tier I international bank that will be collecting premiums.
The insurers say the tender implies that international and third-party administrators will be collecting and managing claims yet the IRA Act explicitly prohibits third parties from collecting premiums.
The underwriters are also questioning the role of international tier I banks in a local insurance cover yet the contract will be between local insurers and visitors entering Kenya.
AKI additionally says that the requirement that the insurers that will be considered must have the backing of the top five international reinsurers amounts to locking out local insurers—a move that will lead to loss of foreign exchange.
The lobby group says a restricted tender would deny customers free choice, as is the case with other classes of insurance such as motor vehicle where clients are free to pick an underwriter of their choice.
“The government should just come in to set the minimum limits and also ensure that the requirement is enforced. The association has already come up with a standard certificate that will be issued, which is also verifiable digitally. A portal that will be available worldwide is in the final stages of development,” says the AKI letter.
This marks the latest controversy in the rollout of the social healthcare programme whose award of Sh104.8 billion tender for the system that runs the service was also marred with secrecy.
Official data shows 44.8 percent or 934,886 visitors in 2023 came in for a holiday, 23.7 percent was for business while 26.7 percent visited for other reasons including medical, religious missions, volunteer activities, sports, health, study, and visit
