As a result of the ‘doctor’s sick joke,’ medical health insurance firms reported a net industry loss of Sh1.1 billion ($11 million).
The health insurers say falsified claims and the high cost of drugs prescribed by doctors in collusion with pharmaceutical firms has pushed more than half of medical cover providers into losses, putting the stability of the industry in danger.
Jubilee insurance estimates that Kenyans are paying at least 50 per cent more for their medications due to over-prescription of branded drugs.
“In Kenya, we are using more brands than generics yet economies like the US use 80 per cent generics despite being richer than us. Doctors, patients and hospitals are united in this,” said the Jubilee Holdings chairman Nizar Juma.
Up to 40 per cent of medical claims in Kenya are said to have an element of fraud, while a significant number of medical procedures, such as caesarean section operations, and laboratory tests are unnecessary yet doctors continue to prescribe them to make a killing.
“The increase in cost is because of preference of branded drugs over generics. Of the total cost of medical attention, 40 per cent is on medication,” said Mr Juma.
Twelve out of the 21 medical insurers, being 57 per cent, of the industry, sank into underwriting losses weighed down by rising claims ratio, fraud and high cost of drugs. Total claims paid out amounted to Sh20.5 billion compared to net earned premiums of Sh27 billion, according to industry data.
The Insurance Regulatory Authority (IRA) fourth-quarter industry report laid it bare that incurred claims ratio, a measure of the claims incurred as a percentage of net earned premium income, hit 75.71 per cent, the highest ratio compared with other insurance classes.
The average industry average ratio over the past three years was 61.8 per cent.
Combined, the 12 loss-making insures had a loss ratio of 80 per cent, with a cumulative underwriting loss of Sh2.1 billion.
AAR Kenya had the largest loss (Sh626.7 million) despite cutting gross written premium by three per cent to Sh5.5 billion.
Resolution Health registered a Sh489 million loss while First Assurance made a Sh360 million loss. Others who closed in medical underwriting losses included UAP, Madison, British American, Sanlam, Pacis, ICEA Lion, Kenindia, Takaful and Kenyan Alliance.
Jubilee Insurance, which was among the nine insurers to close financial year ended December 2018 in underwriting profits, had incurred claims ratio, also called loss ratio, of 67 per cent.
The insurers now say doctors should be barred from prescribing drugs in brands because it makes patients fear the use of generic medicines which have the same effective molecules as the originals.