By JAMES KARIUKI
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Medical underwriter AAR has doubled its reserve to Sh1 billion to cushion itself against unexpected patient claims emerging from an increase in lifestyle-related ailments.
AAR Insurance Group managing director Caroline Munene said they had been observing their 200,000 clients and discovered a pattern where costs of treatment were rising.
“The recent pattern of claims and rising cost of healthcare have made us take a conscious decision to increase our provisions for future claims.It is a short-term trade-off for profits long-term stability,” he said.
A claims reserve is the money that insurance companies earmark for eventual claim payment. They are funds set aside for the future payment of incurred claims that have not been settled and, thus, represent a balance sheet liability.
“The surge in Non-Communicable Diseases (NCDs) such as diabetes, heart disease, cancer among others, combined with high service charges, provider-induced utilisation of services and over-servicing of patients on a fee-for-service basis is really driving the cost of medicare up,” said AAR boss.
NCDs account for 100,000 deaths in Kenya annually, says the Health ministry.
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