The report by Auditor General Nancy Gathungu shows that the National Police Service insurers have not lived to the terms of the multibillion-shilling contracts, thus condemning hundreds of officers to unprecedented suffering.
The report covers the 2022-23 financial year.
Interrogation of at least three insurance covers by different providers revealed serious defaults on the side of the insurers, exposing the officers to agony.
The insurers included two unnamed local firms and the state provider, National Hospital Insurance Fund.
The NPS awarded a Sh8.6 billion contract to a local insurance company for the provision of medical cover for both police officers as well as the Kenya Prisons Service.
The deal was inked on December 31, 2022, just months after President William Ruto took over power.
The cover included Sh200,000 excess of loss (ex-gratia) inpatient claims.
The package also guaranteed Sh200,000 last expense for principal members and Sh50,000 for each declared dependant.
However, the audit found that the insurer had not met its part of its bargain by June 2023 hence was in breach of contract.
“Review of payment details and claims made to the insurance company revealed that the company had not paid claims totalling Sh3,100,00 as at 30 June, 2023 in respect of last expense,” the report indicates.
“In the circumstances, the provision of the contract was breached.”
The six-month cover was to run from July 1, 2022 to December 31, 2022 for the 133,644 police and prison officers.
But upon interrogation, it emerged that up to Sh9.9 million was not paid under the last expense claims.
During the period there were 58 claims of principal members, spouses and children.
“This was contrary to the terms of the contract which state that, within three days subject to the provision of a duly completed claim form and copy of burial permit, they shall pay the next of kin,” Gathungu says.
The auditor also raises issues with the Sh2.2 billion NHIF deal that was to provide enhanced Group Life Cover and inclusive of the Work Injury Benefits Act (WIBA) and Group Personal Accident cover (GPA).
The national insurer was found to have defaulted in paying the work injury benefits claims amounting to Sh507 million.
NHIF also failed to pay Sh385 million to the next of kin of officers the life benefit even after the provision of evidence of death as required in the contract.
“Contrary to NHIF requirements to pay group life benefit within five days, it was noted that NHIF had not settled claims raised during the period amounting to Sh385,437,732,” the audit reads.
Under the deal, NHIF was to pay group life benefit within five days upon launching of the claim.
NHIF further failed to pay Sh6.8 million last expense claims on extended contract for the provision of comprehensive medical cover for the two police units.
The extension running from July 1, 2021 to June 30, 2022 was to cover principal members and dependants for Sh989 million.
“Contrary to the provisions of the contract, details of claims made during the period under review up to the time of audit in November 2023 for last expense covered in the comprehensive medical cover revealed that 146 claims of members totalling Sh6,850,000 had been dispatched to NHIF but had not been paid,” the audit says.
In yet another case, Gathungu points to a pattern where another local insurance firm failed to meet its part of the bargain in the provision of Group Life Cover, Work Injury Benefits Act and Group Personal Accident Cover for the two police formations.
The Sh5 billion one-year package was to cater for the 109,557 police officers as well as the 32, 404 Kenya Prison officers from January 1, 2023 to December 31, 2023.
Gathungu however reveals a pile of unpaid Group Life Benefits amounting to Sh220 million, signaling the level of suffering for the families of dead officers.
The contractual agreement required the insurer to pay the next of kin – upon death of an officer – a lump sum compensation of five years of annual basic salary.
“However, at the time of audit in November 2023, the company had not paid Sh220, 138, 900 in respect to group life sum assured,” the report says.
“This is contrary to the contract terms, which state that claims shall be paid within five days after notification and provision of all documentation.”
The insurer was also found to have failed to pay officers under the injury group personal accident.
Under the cover, officers who are out of work as a result of an injury caused by an accident or as a result of illnesses were entitled to compensation for loss of gross salary up to a maximum of two years.
This, according to Gathungu, remains unpaid with the NPS’s records indicating an accumulation of unresolved cases.
The findings show that the service had a backlog of 312 persons with unpaid claims.
“The contract provides that permanent total disability under Group Personal Accident shall be compensated at a rate of five years basic salary multiplied by the percentage awarded,” the report reads.
“However, during the period under review the company had not processed four claims amounting to Sh1,405,800 under fatal GPA.”
