Kenyan insurers have been meeting to develop a joint response to put a limit on claims arising from the treatment of COVID-19, following a directive by the Insurance Regulatory Authority (IRA) that all pandemic claims be settled in full.
The underwriters said they face the possibility of increased expenses related to the coronavirus that could push them into losses if no cap is imposed.
Association of Kenya Insurers (AKI) CEO Tom Gichuhi said industry players could face great uncertainty if they continue to settle open-ended claims. He advised that a limit on claims must be set at a level that the industry can withstand in what will see the insurers set caps similar to those offered for maternity covers.
“Soon we will be able to tell the public the amount that will be paid per person and the total amount the industry can sustain,” he said.
According to Mr Gichuhi, life claims from deaths have not been a big issue but medical bills, which can top KES1m ($9,417) per person, may be challenging if the numbers are high and the pandemic persists.
In the last quarter of 2019, medical lines contributed the second largest portion of premiums at KES42.4bn and incurred the largest claims at KES20.4bn. Medical insurance remains a loss-making segment due to fraud, price undercutting and high hospital bills.
On 8 May, the IRA confirmed knowledge of the talks, adding that it will issue a policy directive this week after meeting the industry players.
In late April, the IRA granted a grace period for payment and renewal of premiums for
policyholders facing financial difficulties due to the COVID-19 pandemic. The regulator said insurers will be required to give their clients concessions such as deferral of payments or renewal of premiums, including considering offering holidays and the option of staggered payments.