Medical insurers plan joint tech platform to curb fraud

The Association of Kenya Insurers (AKI) is seeking a consultant to help create a common health insurance database to curb rising fraud, especially in the medical segment.

The consultant will be expected to create a system that will provide a range of fees for various medical procedures and anything above the upper limit will trigger an alert for special authorisation in a bid to catch cheats.

“The system should be able to flag and share information on high-cost claims, limit will be determined from time to time and also share coded data on terminated members/clients history by ensuring that legal conflicts are avoided,” says AKI in tender documents seen by the Business Daily.

Insurers in 2018 launched a similar system for the motor private and motor commercial class of business dubbed the Integrated Motor Insurance Database System (IMDS). AKI said earlier in 2020 the system had saved the industry more than Sh42 million in the two-year period since it was launched.

The insurers now say that through sharing of data, the new system for medical insurance, will generate insights and trends and in turn, make it easier for insurers to detect fraud at both the underwriting and claims level.

Fraud, lack of rich data and price transparency, premium undercutting, high business administration charges due to duplication of efforts and lack of aggregate insight lead to high costs, AKI says.

“The above would be addressed by coming up with an integrated Health Information Exchange and Management System,” says AKI.

Medical insurance is the second-largest class of short-term insurance business after motor cover in terms of gross written premium.

However, rising insurance claims have condemned the class to years of losses, driven by high doctors’ fees and cost of drugs.

The health insurers say that falsified claims and the high cost of drugs prescribed by doctors have pushed the majority of medical cover providers into losses, putting the stability of the industry in jeopardy.

This is reflected in Kenya’s booming private healthcare sector that is driven by increased demand for their services amid underfunding of the public health sector.

According to statistics from the Insurance Regulatory Authority (IRA), medical claims jumped 29.59 percent to Sh7.73 billion in the first quarter of this year from Sh5.97 billion in the first quarter of last year.

The medical claims contributed to the largest proportion of incurred claims at 42 percent compared to motor private (25.5 percent) and motor commercial (24 percent), the IRA data shows.

The incurred claims ratio or loss ratio which measures the claims incurred as a percentage of net earned premium income in the medical class of business jumped to 79.6 percent in the first quarter of this year from 72.1 percent in a similar period a year earlier.

Medical insurance firms have accused doctors of engaging in fraud by colluding with pharmaceutical firms to fleece health insurers who recorded underwriting losses of Sh628.58 million in the first quarter of this year compared to a profit of Sh11.59 million in a similar period a year earlier, according to IRA.

Insurance companies have set up measures including technology to combat motor and medical frauds which have been the biggest problem in the sector.

Last year AKI launched a mobile platform for filing accident claims in a push to cut back on motor fraud, reducing instances of fraud where motorists would collude with the police to alter circumstances of an accident.

The application with geolocation features allows users to upload videos and photos from the scene of the accident together with police abstracts, ID card and driving license.

While these efforts are seemingly bearing fruits, insurance companies are now facing a problem within their organisations as employees become their biggest concern.

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