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How Insurance Cartels Have Taken Over Multi-billion Businesses Meant For NHIF As The State Insurer Faces Collapse


Every year, the government of Kenya loses billions to corruption, mostly through flawed procurement processes to benefit few people and institutions.

One of the most affected sectors is the insurance sector, where state agencies insure with certain companies and in return senior officials receive kickbacks.

The most affected departments are those with a good number of civil servants like the Teachers Service Commission (TSC), the National Police Service (NPS) and some counties.

In all these shenanigans, the agencies are offered cheaper deals by the National Health Insurance Fund (NHIF), whose portfolio weighs up to Ksh60 billion, buts opts for expensive deals from private insurers mainly for kickbacks.

Read: Loading Scandal? TSC Planning Ksh9 Billion Insurance Cover For Teachers

For instance, Nairobi County got proposal of Ksh800 million package for its staff but they they chose private insurers at a cost of Ksh1.4 billion.

NPS currently parts with at least Ksh6 billion for health insurance cover for the men in uniform, while they had better offers as low as Ksh4.5 billion.

TSC on the other hand spends over Ksh12 billion on medical insurance yet the NHIF proposal was at between Ksh6 to Ksh8 billion.

The private insurers come with a lot of limitations, and at some times beneficiaries are denied treatment due to delayed premium payments by the government.

Read: Deductions Of Female Teachers’ Salaries By TSC For Kewota Is Illegal, Kuppet Says

This writer learns that last year the government delayed to pay group life for disciplined forces for nearly whole year. The insurer, Pioneer Insurance, refused to pay claims to injured/dead officers till they were fully paid premiums. The kind of interruptions of services were even experienced during AON –MiNET insurance tenures covering the police.

“They had to go back to the state-owned insurer who offer interrupted services while waiting for funding from treasurer since its nonprofit body,” says a source privy to the events.

The Cartel involved for lobbying for the NHIF sabotage has been involved in the same for several years. There is a company by the name Clinix. Clinix was once sued by the state for fraud of NHIF funds to a tune of over Ksh200 million. Clinix is part of Nairobi West Hospital and associates with the foreign investors trading under GVS Bliss Health Services.

Clinix is associated with Nairobi West Hospital, GVS Bliss Clinics, with all having a common director and broker called Jayesh Saini.

Read: TSC Boss Nancy Macharia Teams With Scammer Jayesh Saini In Teacher’s Health Insurance

Sources say that at one time, Saini was pushed out of business at NHIF, forcing him to go slow on Clinix and instead came up with GVS Bliss which has offices in Dubai and also has big role in Nigeria where the social insurance is dead.

They came with same module of providing health services like NHIF under module called capitation in which clients are restricted treatment in their group of clinics and specific hospitals.

After this they approached Nairobi then under Evans Kidero convinced him with the deal then tender documents were manipulated and strictly required companies to quote on the capitation module only.

This kind is only provided by Clinix, Bliss GVS and Nairobi West Hospital. By doing this since they could not tender directly as hospital yet it is required for insurance they encrypted in or hide behind AAR Insurance Company.

“So, AAR tenders but it acts as a broker for this cartel that it takes most of the premiums and
operates behind the umbrella of AAR. They have held the business for over eight years being paid premiums of above Ksh1.4 billion annually,” says our source.

Read: Petitioner Backs Down In Amaco Insurance Wind Up Case

At TSC, they lobbied the union and commission to pull out of NHIF. They attached tender document prepared together with the cartel with specifications that blocked all other brokers from participating. The requirements were only made by one user MiNET Insurance brokers that has also held the business for over five years.

MiNET was used by Clinix as an umbrella for the tender jointly bring on board other parties like Jubilee for medical and Pioneer Insurance for Group Life. The tender for TSC was done end of last year with very inflated figures. The cost of TSC shot up from Ksh6 billion at NHIF to over Ksh12 billion budget annual.

After complains were raised over the TSC  and police medical covers and poor services by then the umbrella tenderer AON MiNET and AAR insurance the Cartel led by Jayesh Saini have changed tact now instead using AON MiNET as the administrator the group registered a medical administration company called Medical Administration Kenya Ltd with the current CEO of MiNET Mr Sammy Muthui having hidden interest together with Jayesh. Jointly they have in cooperated
Jubilee Insurance with former KWS CEO Julius Kipngetich being in the loop.

Read: Relatives Drag Deceased Father Of 38 To Old Mutual Offices Over Insurance Money

Our mole intimates that they have manipulated the tender for NPS medical cover and changed the specifications to fit into Jubilee, Bliss with Kenbright brokers acting as the actuarial services company.

“The medical proposal by NHIF was at Ksh4.5 billion with free last expense. They have convinced the Treasury and Interior ministries to increase this to Ksh6 billion,” adds our source, who sought anonymity due to sensitivity of the matter.

Kahawa Tungu learns that this week the national police did an addendum in which they added Ksh250,000 last expense benefit, and this will also increase the cost of the tender by another nearly Ksh500 million yet the same benefits are offered under the group life/last expense cover for Ksh2.5 billion by Pioneer Insurance which has reportedly failed to pay claims to several police families but yet contracts have been renewed continuously for eight years.

Read: Earnings Per Share For Listed Insurance Companies Grew By 3.8PC In The First Half Of 2019 – Report

“Once the tender (police medical cover) is awarded to Jubilee Insurance as planned the money will be offloaded to medical administration Kenya ltd. Jubilee Insurance will remain with small percentage like 20 percent and small amounts paid to CIC and Madison,” says our source.

Despite several complaints being launched with the Insurance Regulatory Authority (IRA), no actions seems to be coming forth.

Yesterday, NHIF agreed that they are facing collapse, as the claims exceed contributions, sometimes attributable to illegal claims.

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Written by Kahawa Tungu


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