NHIF on the spot again over Sh6.5b civil servants cover

Monday, November 23rd, 2020 08:00 |
NHIF chief executive Peter Kamunyo when he appeared before National Assembly committee of Health on November 18. Photo/PD/SAMUEL KARIUKI

Even before the dust settles on the Sh2.3 billion Kenya Medical Supplies Authority (Kemsa) saga, the country could be in the throes of yet another scandal at the Ministry of Health.

The alleged new scam involves a single-sourced medical cover tender for more than 100,000 civil servants and National Youth Service (NYS) employees, a deal in which the National Hospital Insurance Fund (NHIF) risks losing billions of shillings.

Details of the alleged scam emerge on heels of a stern warning by Health Cabinet Secretary Mutahi Kagwe that  NHIF officials against any attempts to swindle the public.

“I can assure you that nothing will happen under the table when dispensing the tenders for medical cover. Corruption is not going to happen under my watch,” the CS had assured the country last Monday.

NHIF has been given the mandate to insure thousands of frontline healthcare workers who include 23,671 doctors and nurses for Covid-19.

The cover includes Comprehensive Group Life, Last Expense, Enhanced Work Injury Benefits and Group Personal Accident cover.

But even as Kagwe issued the warning, details in our possession indicate that some individuals, in collusion with government officials, are plotting to reap from the deal where close to Sh6.3 billion from NHIF will be shared among a few single-sourced private insurers.

Last week, Kagwe launched the multi-billion cover that will see healthcare workers benefit from a comprehensive Covid-19 medical insurance cover following approval by the Cabinet.

In a letter seen by People Daily, NHIF Chief Executive Peter Kamunyo has written to a top insurance company explaining the nature of the business it has been co-opted in. 

The letter, dated November 3, 2020, has been copied to the Insurance Regulatory Authority (IRA) CEO Godfrey Kiptum.

“NHIF has entered into a contract for the provision of Comprehensive Group Life, Last Expense, Enhanced Work Injury Benefit and Group Personal Accident Insurance for civil servants and employees of the NYS ervice at a premium of Sh6,331,036,782,” Kamunyo writes in the letter titled: Co-insurance participation on Group Life & Last Expense covers for civil servants and employees of the National Youth Service. 

According to the letter, the tender has conveniently been back dated to October 1 and will run up to September 30, 2021.

Some players in the insurance industry say the scheme by-passes all the procurement laws stipulated in the Public Procurement and Asset Disposal Act (PPDA).

Promotes competition

The Act seeks to promote competition, ensure competitors are treated fairly and promote integrity and fairness in tendering process.

Kamunyo’s correspondence clearly overlooks sections of the Act that require competitive bidding.

From the letter, it is clear the tender has not been advertised, raising questions over its legality.

“The decision to select your firm as a co-insurer is based on merit where NHIF in consultation with Insurance Regulatory Authority (IRA) identified and selected the top five (5) Group Life Insurance Underwriters based on the 2019 IRA premium data for Group Life Class of insurance,” he wrote.  

The contract, which covers 101,483 civil servants and employees of the NYS, is renewable on an annual basis subject to performance. 

“In order to spread the risk and create risk retention capacity within its under writing department, NHIF invites your firm to share the risk by participating as a co-insurer for a share of the Group Life and Last Expense Cover,” Kamunyo writes.

The insurance company, which we cannot name at this stage, is advised to ensure equity and fairness in the Group Life premium sharing and distribution among other companies, some selected by NHIF and IRA. 

Appearing before the National Health Committee last week, Kamunyo, defended the decision to single source the contract for co-insurers on grounds that they had sought guidance from both the National Treasury and IRA.

“We sought guidance on the life risk bit of the contract that NHIF could not handle to enable us to spread the risk that we could not handle ourselves as stipulated in the contract,” Kamunyo said in response to a question by Vihiga Woman Rep Beatrice Adagala.

But yesterday, Kamunyo declined to comment on the issue, only insisting that the process was above board and that there is nothing else to talk about.

“Those are allegations from those who lost out in the selection process. The whole process was above board. That is the much I can say,” said the CEO.

Contacted, Public Service Principal Secretary Mary Kimonye said she did not know whether NHIF had kicked off the process of picking a contractor, raising questions about whether the tender had gone through the right procedures.

“I am aware about the cover. What I am not aware of is whether NHIF has began the process,” she said.

Kimonye said procurement of a tender involving public servants has to be in the public domain.

“To procure for that kind of tender without advertising it... would be wrong. To begin such a process without putting it in the open market is unlawful,”she stated.

In his letter to the insurance company, Kamunyo advised that the selection criteria of the two facultative reinsurers should be on merit as per the 2019 IRA Group Life premium report.

“A facultative insurer should not be participating in more than one company,” he wrote.

Upon receipt of the letter, the company is required to submit an acceptance letter and a schedule indicating their Facultative Insurer and the share of risk ceded with a minimum 20 per cent per each Facultative Insurer.

“We shall submit the premium workings to enable your firm to complete the underwriting process,” he concluded.

A source dismissed the tender process as an arrangement meant to milk State coffers.

“This is not procurement. It is not anywhere within the Public Procurement RegulatoryAuthority requirements. This is just local arrangements,” the source, who we cannot name because he works closely with the insurance company.

The sources questioned why the company was chosen yet there are 48 insurance companies cleared and certified by the PPRA and IRA for 2020 operations.

“Why deem other companies as small and allow multinationals to handle risks that could be better managed by local firms?” he asked.

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