Mauritian insurer to keep off health cover

Mauritius Union Assurance (MUA), formerly Phoenix East Africa Assurance, says current premium charged for health covers are unsustainable given the high levels of fraud in Kenya.

The insurer said health insurance is not on its immediate list of expansion as it makes Sh3 billion investment in new and existing products to grow its market share.

MUA chief executive for Kenya and East Africa market Ashraf Musbally said the firm will instead prioritise strengthening general insurance business and launching life insurance through acquisition model.

“For medical, we want the market to re-adapt itself first because premiums are so low yet claims are so high. We want the level of premium to increase because if it doesn’t, all players in that area will be insolvent,” said Mr Musbally. “The level of fraud is also very high. We need to be careful what we do. The turnover is high but there are no profits.”

Data from Insurance Regulatory Authority shows the incurred losses in medical underwriting jumped more than seven times in only two quarters of 2018 compared to the full year in 2017.

In the second and third quarter of last year, total medical underwriting losses stood at Sh1.48 billion, up from a loss of Sh236 million for the whole of 2017. According to Mr Musbally, verifying each medical claim is labour intensive process and has pushed up the operating costs for most players.

CIC General Insurance managing director Elijah Wachira had in February told Business Daily that fraud and high doctors’ fees are making it difficult for medical underwriters to operate profitably.

“As things stand, I see insurers likely to raise their premiums because they cannot survive this way,” he said.

In Mauritius, MUA is the second largest underwriter of medical insurance. The CEO said the level of fraud is much less there and the firm has also invested heavily in technology to stem out fictitious claims.

“Today, you make a claim and receive payment seven days later. Technology makes the difference and we will need it here before venturing in health,” he said.