Raw deal for police and prisons officers in Sh9bn cover plan

The Sh8.6 billion police insurance scheme does not work, an audit shows.

The officers are left to struggle accessing compensation and other benefits despite the insurer receiving billions of taxpayers’ money.

The cover was to provide comprehensive medical care, life insurance, compensation for injuries sustained in the line of duty and benefits in case an officer dies.

This has however not been the case, according to a damning report by Auditor General Nancy Gathungu.

For instance, the report reveals that officers who sustain injuries in the line of duty are not compensated, despite being provided for in the deal. 

By the time of the audit in November 2024, the insurer had not settled 262 injured or ill police officers as stipulated in the contract.

Under the deal, in case a member is out of work as a result of injury from an accident or illness, one is entitled to compensation for loss of gross salary up to a maximum period of two years.

“However, review of insurance records revealed that as at the time of audit in November 2024, the insurer had not settled two hundred and sixty-two unpaid injury GPA [Group Personal Accident] claims despite having been notified,” the report states.

The revelations are contained in Gathungu’s report for the 2023-24 financial year.

Police officers are among government employees who often face life-threatening situations in the line of duty.

Auditors discovered that the insurance company had not compensated 509 officers for temporary disablement, known in insurance parlance as work injury benefits.

“Clause 2.1.1 of the contract provides that temporary disablement shall be compensated through a periodical payment equivalent to the members’ salary,” the report indicates. 

“Periodical payments shall be made for as long as the temporary disablement continues but not for a period that exceeds 12 months.”

However, review of insurance records revealed that as at the time of audit the insurer had not settled 509 Work Injury Benefits Act (Wiba) claims.

Further, the unidentified insurance company failed to honour claims in respect of two deaths as provided for in the contract.

According to the contract, death or total disablement under Wiba or as a result of occupational/accident shall be compensated at a rate of eight years gross salary of the beneficiary.

Upon the death of an officer, declared next of kin should be paid lump sum compensation equivalent to five years' annual basic salary.

“However, as at the time of the audit in November 2024, the insurer had not paid twenty-one (21) claims totalling to Sh43,459,800 in respect of the group life sum assured,” the report reads.

“This was contrary to the contract terms, which state that claims shall be paid within five (5) days after notification and provision of all documents.”

This is despite the National Police Service spending Sh5 billion for the provision of group life cover, Wiba and group personal accident cover for141, 961 officers.

Gathungu faults the NPS for failing to adequately monitor the implementation of the contract to ensure value for money.

“Management did not adequately monitor the contract to ensure that the contract terms were complied with and ensure value for money and benefit to the members and their beneficiaries,” Gathungu points out in the findings.

The National Police Service awarded Sh8.6 billion for medical cover which included Sh200 million, excess of loss (ex-gratia) inpatient claims.

The cover was to run January 1 to December 31, 2023 with a threemonth extension to March 31, 2024.

The three-month extension came with an additional Sh2.1 billion in premiums. The auditor further raises issue with the spending of the Sh200 million ex-gratia inpatient claims.

According to the deal, the Sh200 million ex-gratia was to be approved by the standing committee of the police before being used by the insurer.

The insurance company was also to provide the committee with quarterly reports on the utilisation of the Sh200 million and submit any unspent amount.

“However, the insurance company did not provide reports on the ex-gratia claims and amounts paid from ex-gratia for medical cover contract between January 2023 and April 2024 and there was no evidence of approvals of ex-gratia payments by the standing committee,” the audit report states.

“Further, the insurance company did not submit back unspent amount of ex-gratia at the end of the contract period.”

Gathungu concludes:

“In the circumstances, the provision under Clause 9 of the contract was breached and the Sh200,000,000 for ex-gratia remains unaccounted for by the insurer.”

The report that is currently being considered by Parliament covers 2023-24 financial year. Gathungu also reveals anomalies in the provision of comprehensive medical cover by the defunct National Hospital Insurance Fund.

The scheme that covered the period between July 1, 2021 and June 30, 2022, revealed, among others,  millions in unpaid last expense. In the contract, NHIF was to pay last expense for the principal members at a rate of Sh200,000 and Sh50,000 for one declared dependent.

The claims were to be paid with 72 hours from the time of submitting the claims. But the auditor now reveals that 51 claims of members totaling Sh8.7 million had been dispatched to NHIF but had not been paid.

“In the circumstances, management did not adequately monitor the implementation of the contract to ensure that the contract terms are complied with and ensure value for money and benefit to the members and their beneficiaries from the contract,” the report indicates.