Insurance companies will only pay for coronavirus disease treatment in public hospitals after the regulator adopted proposals from insurers to drop coverage in private institutions on fears of increased expenses related to the respiratory disease that could push them into losses.
The Insurance Regulatory Authority (IRA) told the Senate that insurance companies will not pay for treatment in private hospitals where bills range from Sh600,000 to Sh1.2 million.
Instead, they will cover expenses incurred in public hospitals where bills for treatment of the infectious virus are estimated at Sh135,000, the regulator told lawmakers in a statement seen by the Business Daily.
Testing in private hospital, the cost of isolation and quarantine without treatment will also not be covered.
“The insurance industry will pay for testing and treatment offered in government hospitals. These will include facilities run by the central government and county governments,” Godfrey Kiptum, the IRA chief executive, told senators.
“Persons treated in private hospitals will be requested to make their own arrangements”.
This is a win for insurance firms who have been meeting to develop a joint response to a March directive by the IRA that all Covid-19 claims be settled. However, it is a loss for their customers as it dims hopes of their treatment in private hospitals.
The Association of Kenya Insurers (AKI)— the firms’ lobby group — had said that the insurers faced great uncertainty if they continued to settle open-ended claims.
Over the years, insurers have adjusted their claims to “direct and physical loss damages” to avoid the growing threat of pandemics with the increasing occurrence of episodes of viral diseases like Sars and Ebola.
Insurance firms argued that their policies only give basic cover, with no obligation to pay out in relation to a pandemic like coronavirus on fears of widespread ballooning costs.
When the World Health Organisation (WHO) declared the novel coronavirus a pandemic on March 11, AKI said the classification indicated that patients would settle their own bills if cases were reported in Kenya.
Since the first case of coronavirus was reported in Kenya on March 13, insurance companies have received 45 claims amounting to Sh11.9 million. Out of these, Sh1.45 million has been paid, Sh9.8million is pending and about Sh580,000 is unpayable, Mr Kiptum told the Senate.
“This number is expected to increase as the Covid-19 situation persists,” he said in reference to the forecast rise in medical bills.
Kenya has confirmed 2,216 positive cases of coronavirus out of 85,058 samples with 74 reported deaths and 553 recoveries from the infectious disease. The numbers are expected to increase should Kenya step up mass testing.
Medical claims contributed the second largest portion of premiums at Sh42.4 billion in the last quarter of 2019 and attracted the largest claims at Sh20.4 billion in the same period.
In Kenya, medical insurance remains a loss-making segment due to price undercutting, fraud and high hospital bills. Medical insurers’ underwriting loss doubled to Sh75 million in 2019.
IRA seems to have softened its position in the wake of the threat posed by Covid-19, which has forced a review of insurance rules. The regulator has increased the validity of insurance contract for three months where customers faced challenges paying premiums and made it difficult for insurance companies to avoid meeting claims.
IRA also said late filing of claims or failure to pay premiums will not be used as an excuse to avoid coronavirus-related claims. Further, insurance companies will not be allowed to introduce new product exclusions or change product terms and conditions without approval from the regulator.