Fraud threatens medical insurance penetration levels

A woman with a child at a health centre. Experts say insurance companies in Uganda lose between 15 to 25 per cent of revenue to fraud annually. FILE PHOTO

What you need to know:

Fraud losses. A 2013 Deloitte Financial Crimes Survey indicates that Uganda loses between Shs2.4 billion and Shs24.9 billion to fraud annually

Medical insurance has turned out to be unprofitable for insurers because of fraud perpetuated by unscrupulous people within the industry.

Although there is no readily available data, players say the industry is losing millions of shillings annually to fraudulent or questionable medical insurance claims.

The Insurance Company of East Africa (General Insurance) chief executive officer, Mr John Karionji, told the Daily Monitor recently that insurance firms are now hesitant to fully venture into the provision of medical insurance to guard themselves against incurring huge losses.

“Many companies offering medical insurance policies are not making any profit from that segment of business because of fraud. It’s a challenge that we would like to overcome,” Mr Karionji noted, adding that this has hampered growth of medical insurance in Uganda.

He added that fraudulent claims perpetuated by both the insurance policy holders and some unscrupulous medical practitioners increase insurance service providers’ expenditures.

Forms of fraud
The commonest medical insurance frauds include using the same identification document to get a service, fraudulent billing, inflating claims, billing for services that are not rendered and carrying out unnecessary tests, among others.

Mr Karionji noted that the biggest contributor to medical insurance fraud is identification where the insured person gives the card to uninsured relatives who end up over using the insurance cover.

“You find that one cover is used by five people and this means that you are permanently receiving claims which are costly on the part of insurance firms,” he said.

Ms Agnes Nakatudde (not real name), told this newspaper that she was once forced to do a blood group test thrice at one of the hospitals yet the hospital ought to have kept records of the previous tests for reference.

“Despite telling the doctor my blood group and reminding him that I had taken the test from that hospital, I was told to do another test, with the laboratory attendant saying that after all, she was not paying from her wallet since she was on medical insurance.

However, Ms Grace Kiwanuka, the deputy chairperson, Uganda Healthcare Federation, says doctors are supposed to do a cross-matching to establish or confirm a patient’s blood group before doing a procedure/operation.

“We are dealing with people of different levels of education; someone might remember their blood group as O positive yet its O negative or AB; so any time one seeks medical attention, they have to cross check their blood to confirm so that in the event that they need to do transfusion, they give the right blood type,” she said.

Ms Kiwanuka who also works with AAR, one of the hospitals that provide managed care for health insurance contracts to corporates and individuals under the Health Maintenance Organisations (HMOs), noted that it is unfair to single out medical insurance yet fraud affects all industries and segments of insurance.

Uganda has 10 licensed HMOs that include the International Air Ambulance (IAA), AAR Health Services, Case Medical Care and International Hospital Kampala, International Medical Link (IML), International Health Network (IHN), Kadic Health Foundation and St. Catherine Clinic, among others, accounting for 12 per cent of the insurance market share.

Although there is no readily available data, Mr Mustapha Mugisa, a forensic and anti-fraud expert, said insurance companies in Uganda lose between 15 to 25 per cent of revenue to fraud annually.

A 2013 Deloitte Financial Crimes Survey indicates that Uganda loses between $1 million (Shs2.4 billion) and $10 million (Shs24.9 billion) to fraud annually.

Although it is estimated that not more than 500,000 people out of a population of 35 million have medical insurance, insurers believe the segment has great growth potential if challenges are addressed.

Possible solutions to fraud
To curb the illicit practice in medical insurance, Mr Karionji noted that some players have deployed the use of biometric technology to minimise cases of identification fraud and also engaged medical service providers about the same.

Ms Kiwanuka also noted that there is need to sensitise stakeholders to explain how medical insurance works.
“Some people think that they have to use all the money as provided for in the limits and this gives an impression of fraud,” she said.

Ms Faith Ekudu, Uganda Insurer’s Association public relations and advocacy officer, said although medical insurance fraud is not unique to Uganda, the association plans to meet with medical service providers with a view of standardising service provision, minimise fraud cases and improve service provision.

The Insurance Regulatory Authority chief executive officer, Mr Ibrahim Kaddunabbi Lubega, however, urged insurers to be more vigilant without compromising claims payment.

National insurance scheme
He also appealed to government to fast-track the National Health Insurance Scheme (NHIS), saying it will help reduce fraud in medical insurance since everybody will have a medical insurance cover.

The NHIS is a form of health insurance care financing where people who earn a monthly income will be obliged to pay a pre-determined premium to the scheme and enable them and members of their families to access quality health care services from an approved public or private health facility.

If introduced, it is expected to boost insurance penetration which currently stands at 0.85 per cent of Gross Domestic Product.


0.85%: Percentage of insurance penetration in Uganda.

10% :Number of licensed Health Maintenance Organisations in Uganda.

15-25% :Percentage of revenue that insurance companies lose to fraud annually.

500,000 :Estimated number of people in Uganda who have medical insurance.