Insurance Industry raises concerns on the NHIF Amendment Bill, 2021

Good health is a pre-requisite for the social and economic development of any country and hence the Government’s agenda on providing Universal Health Care is critical. Health insurance in Kenya is also ably provided by private insurers though at a higher cost than the NHIF.

The NHIF Amendment Bill, 2021, currently before Parliament has raised concerns within the insurance industry. These issues articulated below must also be deliberated on as they will impact the insurance industry and economy.

Concern 1

Proposed Section 15 which states that, contribution will be by all Kenyans from 18 years and above in both formal and informal sector. Employers are required to contribute an amount equal to that which they have remitted on behalf of their employees. 


The requirement for employers to match employee contribution will impact on the cost of labour. Consequently, employers who have supplemented their employees’ NHIF insurance cover with private medical insurance may cease to do so or considerably reduce the private medical insurance benefits available to employees in a bid to mitigate the rise in labour related costs.

This will deal a blow to the insurance industry premium which contributes to slightly over 2% of the country’s GDP.

The increased cost of labour will lead to more employee layoffs further aggravating the already bad unemployment situation in the country.

High labour costs will make Kenya unattractive to foreign investors especially in labour intensive industries such as agriculture and hospitality services. Investors may opt to move to other countries where the cost of labour is more manageable.

Proposed Solution:

Employers who are able to sponsor their employees for private medical covers should be exempted or allowed to “opt-out” of making “the matching contribution” into the fund.

Employers running their own clinics should also be allowed to opt out provided they are able to demonstrate that they are offering more than the basic healthcare services.

The Bill should provide room and encouragement for voluntary action by individuals to provide more than the minimum required cover.

Concern 2

Section 22 – Where one has private insurance, the private insurer will be required to pay first and NHIF will come in once the benefits of the private insurer are exhausted.


This proposal will increase the cost of providing private medical insurance which will reduce uptake. In turn, there will be over reliance on NHIF cover.

When pricing medical insurance policies, insurers discount the premium on the basis that NHIF will take the first layer of cost as per the set limits and then private cover caters for the balance.

It is also worth mentioning that insurance business shrinkage will have a considerable impact on private insurer’s contribution to the economy through taxes, investment and employment.

Proposed Solution

Contribution to NHIF is mandatory. This plays a key role in ensuring that all Kenyan citizens have access to health care. NHIF therefore should cater for primary health care. Private medical insurers should therefore pay net of NHIF cover in line with global practice. This makes private insurance cheaper and therefore more affordable to the insuring public who will see the value in supplementing the NHIF cover with private medical insurance.

Other Concerns

Financial Sustainability of the current NHIF model

A panel of experts, was appointed in 2019 by the then Health Cabinet Secretary to review the operations of NHIF. The panel tabled its report and recommendations in October 2019.

The committee of experts recommended a total overhaul/restructuring of NHIF which is yet to be undertaken.

The report predicted that with the current medical schemes, NHIF as it is structured would not be in a position to manage them profitably. The report singled out the Civil Servants Scheme and the National Police Service Scheme and projected that these schemes would be making heavy losses from the year 2020.

If NHIF fails, one of its victims will be hospitals and we are likely to see massive closure of non-state health care facilities. Further, a majority of Kenyans will have no access to health care services.

Way forward

We request the Government and policy makers to take the above concerns into serious consideration as they will negatively impact the insurance industry and in turn, the economy.

As a major stakeholder in healthcare financing, we recommend that the report from the committee of experts be fully implemented before the Act is amended.


July 15th, 2021




Insurance Industry raises concerns on the NHIF Amendment Bill, 2021