The growing role of private health insurance in Kenya’s Healthcare System

The Kenyan insurance industry is experiencing notable growth with medical insurance emerging as a key driver of this expansion. As of 2023, the insurance penetration rate was approximately 2.4% of Kenya’s Gross Domestic Product which indicates a significant opportunity for expansion. The growth trajectory of Kenya’s medical insurance industry is driven by the development of alternative distribution channels, adoption of digital solutions, innovative product offerings and an increasingly supportive regulatory framework.

This article explores the expanding role of private health insurance in bridging the gaps within the public healthcare system and its significant contributions to employer-sponsored health plans. It also highlights contributions made by private health insurance to emerging healthcare trends and analyzes key regulatory developments that are promoting the growth of private health insurance.  

Bridging the gaps within the public healthcare system

The Insurance Regulatory Authority (the IRA), Kenya’s insurance regulator, formalized its commitment to promote the role of private health insurers in attaining Universal Health Coverage (UHC) by executing a performance contract with the National Treasury and Economic Planning. This commitment aligns with the Kenyan government’s Bottom-up Economic Transformation Agenda whose objective is to improve the livelihoods and welfare of Kenyans.

UHC seeks to ensure that all Kenyans have access to quality health care without facing financial burden and comprises mandatory national contributions complemented by private health insurance. Private insurers offer enhanced coverage options and access to a broader network of healthcare providers which addresses the limitations of public healthcare such as delays, limited service offerings, and overcrowded facilities. Additionally, private health insurance can support the government’s UHC goals by covering services that may not be fully provided under the SHIF, such as specialized treatments and advanced diagnostic procedures. 

Employer-sponsored health plans 

The Social Health Insurance Fund (SHIF) established under the Social Health Insurance Act, No. 16 of 2023, replaced the National Health Insurance Fund (NHIF) and mandates health insurance coverage for every Kenyan. Employers in Kenya are legally required to register all employees as members of the SHIF and to deduct and remit 2.75% of their employees’ gross salaries as contributions. While this mandatory insurance forms the cornerstone of Universal Health Coverage (UHC) in Kenya, many employers are also opting to enhance their health benefits packages by partnering with private insurers to offer employer-sponsored health insurance. 

Private health insurance plays a significant role in strengthening human resource management and boosting business productivity for large corporates, Small and Medium Enterprises (SMEs) and micro-SMEs. Employers are able to create more comprehensive and competitive benefits packages that aid in attracting high-caliber talent and enhancing job satisfaction for existing employees. As a supplementary arrangement to the SHIF, employer-sponsored health plans ensure that employees have broader access to healthcare services which reduces financial stress and enhances overall well-being.

Emerging trends in coverage

Emerging trends are gradually shaping the medical insurance landscape to enhance accessibility, efficiency, and consumer experience. Historically, private health insurance has been perceived as expensive and inaccessible to low-income earners. However, the introduction of microinsurance products has changed the narrative by offering affordable health coverage with lower premiums, simplified plans and flexible payment terms. This has made private health insurance more accessible to underserved populations.  

Private health insurance providers are also capitalizing on Kenya’s high smartphone penetration rates to improve service delivery and broaden their reach. By leveraging digital channels such as mobile applications and social media, health insurers and intermediaries are seamlessly distributing insurance products and increasing consumer and brand awareness. Policyholders can conveniently access various health insurance plans, manage their insurance information, track claims and receive notifications which significantly improves the consumer experience.

The rise of telemedicine and telehealth is another transformative trend revolutionizing access to healthcare. E-health services are recognized as a legitimate health service delivery model under the Health Act, Chapter 241 of the Laws of Kenya, and the Digital Health Act, No. 15 of 2023. Insured individuals can now remotely consult doctors, receive diagnoses, and access treatment plans which enhances access to healthcare for individuals in remote areas. 

Regulatory developments promoting the growth of private health insurance

Kenya has recently introduced several regulatory developments that create opportunities for private health insurance providers to collaborate with the government and enhance healthcare accessibility and efficiency.

1. The Social Health Insurance Act

The Social Health Insurance Act established the Social Health Authority which includes a Claims Management Office responsible for reviewing, processing and validating medical claims. The Claims Management Office may delegate its functions to medical insurance providers and claim settling agents licensed by IRA. Such delegation facilitates integration of private health insurance intermediaries and service providers with the public healthcare system. Key eligibility criteria for procurement of private health insurance intermediaries and service providers include mandatory registration with the Office of the Data Protection Commissioner and compliance with the Data Protection Act, No. 24 of 2019, and the Digital Health Act, No. 15 of 2023.

Additionally, the Social Health Act has broadened private sector participation through mandatory travel health insurance for foreigners visiting Kenya for less than 12 months. The designated travel health insurance covers the individual’s entire period of stay in Kenya providing benefits such as personal accidents, emergency medical expenses and evacuation, repatriation of mortal remains, hospital benefits and prescription medicines. This travel health insurance requirement presents a lucrative business opportunity for private health insurers.  

2. The Primary Health Care Act

The Primary Health Care Act, No. 13 of 2023, establishes a framework for the delivery of, access to and management of primary health care at the community level. It mandates county governments to facilitate the service delivery of primary health care through various mechanisms including enhancing the availability of quality services, accessibility and predictability of standardized primary health care services through private public partnerships. This creates an opportunity for private health insurance providers, intermediaries and service providers to partner with county governments in facilitating accessibility of primary health care while expanding their client base. 

3. The Digital Health Act

The Digital Health Act provides a framework for providing digital health services and establishes the Digital Health Agency (the Agency) which shall serve as the custodian for all health data in Kenya. The Digital Health Act empowers the Cabinet Secretary for Health to establish a health data governance framework and to require all health data controllers and processors to report designated health data in accordance with approved and prescribed formats and platforms. This nets all insurers underwriting medical insurance, medical insurance providers and claims settling agents as health data controllers and/or processors. Reporting and managing health data in prescribed formats and platforms will ensure seamless integration with public health systems.

Conclusion 

Private health insurance is an integral component of Kenya’s healthcare system. It aids in bridging the gaps in public healthcare services, integral to human resource management through employer-sponsored health plans and adapts to the changing needs of consumers by offering innovative and accessible healthcare solutions. The enactment of supportive regulatory frameworks further strengthens the role of private health insurance in public healthcare delivery and aligns it with Kenya’s Universal Health Coverage goals. 

If you have any questions regarding private health insurance in Africa, pleasse contact Jared Kangwana or Lucy Mwaniki.