Civil servants’ Injury Fund sparks row as MPs declare kitty illegal

Government agencies have clashed over compensation for injured workers. /FILE 

A policy clash is emerging within the government over the settlement of civil servants' injury and insurance compensation claims.

The conflict is revealed in two contradictory letters from the National Treasury and from the Public Service ministry on how to handle compensation for staff injured on duty.

While Public Service PS Jane Imbunya proposed a new internal fund, Treasury Principal Secretary Chris Kiptoo insisted the claims be handled by the Social Health Authority (SHA).

Treasury holds that the authority is the one legally mandated to handle work injury-related compensation claims.

The letters obtained by the Star show Imbunya wrote to the Treasury on July 17, proposing the allocation of Sh1.2 billion to create a self-administered compensation fund within the ministry.

She justified this by citing Executive Orders and a section of the Work Injury Benefits Act (Wiba) that allows for a self-insurance model.

“The Executive Order No1 of 2023 places the administration of insurance and welfare programs for the civil service, including comprehensive group life, last expenses, work injury benefits and group personal accident insurance cover under the Ministry of Public Service,” the PS wrote.

Her proposal includes relocating the existing GPA/Wiba unit from the Treasury to her ministry.

“A similar arrangement should be instituted to cover civil servants and teachers employed by the Teachers Service Commission,” Imbunya said.

The same should apply to police “for parity of treatment and ease of administration”.

As such, the initiative is to be administered through a newly created internal compensation fund housed within the State Department for Public Service.

However, this proposal directly contradicts a letter sent by Kiptoo to SHA on July 1.

In his letter, Kiptoo emphasised the government's commitment to the existing contract with SHA, noting that the National Treasury had already remitted Sh1.58 billion to reduce an outstanding premium of Sh8.14 billion.

“As you are aware, the government partnered with NHIF, now SHA, to provide vital insurance cover—Group Life, Last Expense, Wiba and GPA for our civil servants and National Youth Service (NYS) for the periods 2020/21, 2022/23 and 2023/24,” Kiptoo said.

He stressed the urgency of settling claims through the established SHA framework to "restore confidence in the programme".

“The initiative reflects our shared commitment to safeguarding the well-being of public servants and their families,” Kiptoo’s letter adds.

“In line with the regulatory guidance from the Insurance Regulatory Authority, NHIF engaged reputable reinsurance partners to strengthen the programme’s resilience and reach.”

Members of Parliament have sharply criticised and faulted the government’s move to allocate Sh1.2 billion for the settlement of civil servants’ injury and accident claims.

The lawmakers hold that the move contravenes existing laws, terming it an insurance business outside the legal framework established under SHA.

Anthony Kibagendi (Kitutu Chache South MP) and Makueni Senator Daniel Maanzo warn that creating a ministry-based fund is a "return to illegality".

They cited contravention of the Insurance Act, the WIBA Act and the Public Service Superannuation Scheme Act, inasmuch as the initiative may be intended to provide relief for civil servants who have pursued their claims for an inordinately long period.

“Creating a ministry-based fund is a return to illegality and a blatant abuse of public funds. We will reject it,” Kibagendi said.

Maanzo questioned the initiative, noting that “however good as it sounds,” the premiums for medical, Life, Wiba, Group Personal Accident and Last Expense covers have already been remitted to SHA.

“Why is the government creating a parallel initiative for compensation of public servants? As of now, it is only SHA, which has the legal mandate, capacity and data to manage these benefits,” he said.

They argue it exposes the government to litigation and financial risks by bypassing regulated insurance mechanisms.

Their concerns are supported by immediate former Public Service CS Justin Muturi, who cautioned that the fund lacks necessary actuarial and regulatory oversight, exposing public funds to potential fraud and mismanagement.

“Setting up a parallel process for employee benefits not only fragments accountability and delays justice for principal members and their families but also undermines efficiency,” Muturi said.

Critics also point out that the proposed fund replicates the "GPA Operations Unit," which was declared illegal in 2017.

INSTANT ANALYSIS

The core of the dispute lies in legal mandate versus administrative control. While the Public Service Ministry seeks to bring the function under its administration, Treasury asserts that SHA holds the contractual and regulatory responsibility. Furthermore, MPs note that premiums for these covers have already been remitted to SHA, making a parallel system redundant and unlawful.