Make medical cover part of New Year plans

What you need to know:

  • Private insurers need to ramp up efforts to increase awareness and uptake among this market segment.

  • Similarly, they need to be more innovative to overcome the cost barriers that prevent Kenyans in the low-income market segments from accessing private medical cover.

  • Health insurers should also be more innovative in recruiting and training their agents, who are the main customer touch points.

Personal financial planning is currently in vogue, as is typically the case in January, when the zealous overspending that characterised December, coupled with the pressing financial obligations that come with a New Year, prompt many to take a hard look at how they make and spend their money.

However, come February, interest in financial planning will steadily decline as most people’s cash flows will have stabilised. This familiar cycle, which recurs every other New Year, is a clear indicator that majority of Kenyans don’t fully grasp the fundamental principles of personal financial planning.

PRODUCTIVE

Ideally, we should not just focus on financial planning for January, but for a lifetime; and medical insurance is a key part of this equation. The purpose of a medical insurance policy is not to make you richer, as is the case with some financial instruments, but to safeguard the financial stability that you and your loved ones enjoy from the shocks of ill-health. The need for medical attention tends to increase as one grows older and less economically productive, hence medical bills threaten savings and family investments. Medical insurance is therefore a risk transfer mechanism and a critical pillar of a solid financial plan.

Unfortunately, only about 25 percent of Kenyans have health insurance, according to Ministry of Health data. Of those with cover, 81 percent have National Hospital Insurance Fund (NHIF) while a paltry 19 percent have private cover, according to a 2018 survey dubbed WaKenya.

The low uptake of private cover needs to be addressed, as underwriters are providing increasingly affordable policies in innovative ways such as mobile and online.

Because of the low insurance cover, majority of health spending — 33 percent according to Ministry of Health — is out of pocket. In the event of high medical bills, out of pocket expenses expose patients and their loved ones to impoverishment, as the bills frequently surpass their cash holdings, forcing them to sell assets to pay their bills or turn to debt and social networks.

1.5 MILLION

Medical insurance is therefore paramount. Without a solid cover, families risk financial crisis and even poverty. The Ministry of Health puts this number at 1.5 million people annually — that’s at least 15 million, or a third of our current population, by 2030 if things don’t change.

It is therefore imperative that we sustain efforts to deepen medical insurance penetration in Kenya. While the government has an instrumental role to play — for example, through President Uhuru Kenyatta’s focus on universal health coverage under the Big Four — private insurers also have an equally critical role to play.

Private insurers need to ramp up efforts to increase awareness and uptake among this market segment. Similarly, they need to be more innovative to overcome the cost barriers that prevent Kenyans in the low-income market segments from accessing private medical cover. Last but not least, health insurers should be more innovative in recruiting and training their agents, who are the main customer touch points.

Models such as micro-insurance products sold via mobile phones present an opportunity to do this. Strategic partnerships with financial service providers who can finance premiums for low income consumers are also feasible. 

Mr Shigoli is the Managing Director of AAR Insurance Kenya