Resolution Health has raised its premiums by an average of 14 per cent for its medical cover from next month in line with the double-digit rise in insurance costs.
The company said the increase is in line with new benefits including cover for people suffering from pre-existing conditions like diabetes, asthma and heart disease.
Other new benefits for both individual and corporate schemes include maternity, dental cover, HIV/Aids where some limits have been revised upwards by Sh200,000.
“The cost of doing business has gone up. If you look at consultation fee in hospitals which is the bare minimum price indicator, it is up by 25 per cent,” said Peter Nduati, the chief executive officer of Resolution Health.
He said the new premiums take effect from February 1 ahead of the company’s plan to convert into an insurance firm from a medical insurance provider (MIP).
The premium review comes when hospitals have significantly raised their charges, citing escalating cost of drugs, food, and medical equipment.
This has, in turn, piled pressure on insurers who have responded by increasing premiums to protect margins.
Kenyatta National Hospital (KNH), Nairobi and the Aga Khan hospitals are some of the providers that have increased their bed and consultation charges from this month, citing the rising cost of operations.
The weakening of the shilling in the fourth quarter of last year inflated the cost of essential drugs and medical equipment. Kenya imports 60 per cent of its medicines and 90 per cent of medical equipment.
The shilling declined steadily to a record low of Sh107 against the dollar in mid October but has rose in the past few weeks to trade at an average of Sh85.
A new survey by research firm TNS found that insurance premiums went up by between 15 and 25 per cent in the fourth quarter of last year, increasing pressure on corporate bodies and households grappling with a double digit inflation rate.
The inflation rate stood at 18.93 per cent in December, dropping marginally from November’s 19.72 per cent.
The survey found that consumers are more interested in affordable insurance packages than their variety and depth of coverage.
Insurance penetration in Kenya stands at less than three per cent, with the low uptake blamed on consumer apathy and high cost of premiums.
Insurance firms have relied heavily on the formal market serving the middle class but that segment is showing signs of maturity with few insurers making profits from the underwriting business.