Employer of teachers immediately about health insurance.
A purportedly erroneous grant of Sh149 billion in teachers medical insurance coverage to Minet Insurance Brokers (MIBK) has put the Teachers Service Commission (TSC) in the public eye.
Additionally, concerns have surfaced regarding whether the contract was granted despite past teacher protests that the insurance company was providing inadequate services, and whether all parties engaged in the process entirely neglected to address legal violations.
Tender Supply Chain at the TSC has also said nothing about the infractions of the procurement procedure, even after being notified about them.
In 2022–2025, Ms. Minet Insurance Brokers Kenya Ltd. (MIBK), a successful intermediary in a tender that aimed to offer teachers comprehensive medical insurance cover, changed its legal status to underwriter and denied teachers the full value of the multi-billion shilling contract.
This is according to a letter written by attorney Wairegi Gatetua to the Insurance Regulatory Authority (IRA) through its Commissioner of Insurance.
New information suggests that TSC paid over Sh149 billion in medical insurance premiums to MIP over a ten-year period, in violation of Section 156(2) of the Insurance Act.
In order to offer teachers with comprehensive medical insurance under a three-year framework contract that is renewable annually, the TSC tender document TSC/T/01/2022-25 solicited the services of a consortium.
Teachers are allegedly not receiving the full value of the contract that the consortium and the TSC completed since the contract was allegedly improperly given to a registered insurance broker rather than an underwriter as stated in the bidding document.
As risk carriers are the insurance companies or underwriters, a medical insurance provider acts as a middleman to put medical insurance business with insurers.
As per Section 156(5) of the Insurance Act, MIBK, in its capacity as an intermediary, is required to remit 100% of the premiums to the medical insurance providers in exchange for a commission.
However, based on the underwriters’ returns submitted to the IRA, MIBK has not been remitting the premiums or the 10% commissions that are payable under the Insurance Act.
The awarding of the Sh149 billion medical insurance has sparked controversy because it has been reported that the Medical Administrator Kenya Limited (MAKL), which is in charge of managing the medical insurance programs for teachers, the Kenya Prisons Service, and the National Police Service, has not yet paid hospitals for services rendered.
accumulated wealth
According to reports, the teachers’ medical fund has amassed Sh7.6 billion, whereas hospitals owe the police and prisons Sh4 billion in arrears.
In a letter dated April 9, MKAL blamed the growing arrears on the National Treasury’s delayed disbursements, a situation that might seriously impair the delivery of healthcare services.
“This is the result of our mutual client’s delayed fund remittance. Given the foregoing, Medical Administrator Kenya Limited (MAKL) wishes to reiterate that we would start paying our bills as soon as we get the anticipated monies from our shared customer, the company said.
When short text messages concerning the abnormalities were sent to TSC Chief Executive Nancy Macharia’s phone via WhatsApp, she did not answer or return calls.
Additionally unavailable for comment were Godfrey Kiptum, the Director-General of the Insurance Regulatory Authority (IRA), whose phone remained unanswered.
According to Gatetua, in the most recent agreement, the insurers and insurance regulator ostentatiously observe in silence as a pitiful 2.68 percent of the premium is transferred to the consortium’s risk carriers, a clearly illegal method.
In the paper, the attorney further asserts that TSC has a clear policy statement upon which to base its calculations of the benefits owed to teachers in the event that the insurers’ premiums are not paid yet the legislation mandates insurance as a payment and delivery service.
Reduced tax income
Furthermore, as the aforementioned sum was never received by the relevant insurance companies, it has come to light that the Kenya Revenue Authority (KRA) has also lost premium tax on a gross premium of over Sh 149 million.
Although obtaining value for taxpayer dollars is the main goal of any tender process, it is standard practice for any agreement signed by the winning bidder and the procuring entity to comply with legal requirements as well as those specified in the tender document.
When the tender is properly analyzed, it becomes evident that the procurement type of contract in question was for brokerage insurance, with a group of underwriters serving as the final recipients of the premiums.
How the contract’s demand to pay such enormous premiums to an intermediary violates both the law and the tender requirement.
“To ensure that the contract achieves the substance of the tender in the aforementioned circumstances, it remains to be seen what kind of supervision, if any, is carried out by the TSC and IRA,” Gatetua said in the paper seen by People Daily.
The IRA was required to formally confirm within seven days what percentage of the premium was remitted to the risk carriers annually over the last ten years by the law firm that had previously put TSC on notice for a number of legal infractions in the captioned tenders.
In light of their involvement in this case, Gatetua further requests that you “establish how the risk carriers provided cover, if indeed they did, without receipt of the attendant premiums in full” and confirm any oversight you may have had over Ms. Minet Insurance Brokers Kenya Ltd. in her capacity as a medical insurance provider.
The insurance industry regulator is also responsible for verifying whether the policy document that the consortium that won the contract issues is in line with the terms of the contract that the consortium and the purchasing body agreed upon.
“We also require you to verify that the risk carriers and insurance underwriters in the consortium are accountable for paying income tax, premium tax, and any other applicable taxes to the Kenya Revenue Authority for the Sh 149 billion that Minet Insurance brokers have paid and kept over a ten-year period,” Gatetua demanded.
In the event that the requested material was not obtained, the legal firm threatened to initiate necessary legal processes without further mentioning IRA, even at the risk of incurring fees and other unintended consequences.
Officials such as the head of procurement at TSC, the attorney general, the head of public service Felix Koskei, the auditor general, the principal secretary in charge of the Ministry of Financing and National Treasury alongside his counterpart at the Ministry of Public Service, Gender and Affirmative Action, and the head of procurement at TSC are among those addressed in the letter headed “Unlawful/illegal contract for provision of teachers medical insurance cover (three years framework contract).”
Employer of teachers immediately about health insurance.