Kenbright Defends NHIF Claim Reserves Amidst Fraud Allegations

Kenbright, a leading actuarial and financial services firm, has issued a strong rebuttal against claims made by fraud risk analyst Bernard Muchere regarding the National Hospital Insurance Fund (NHIF). Muchere, who appeared before the National Assembly’s Petitions Committee, alleged that NHIF’s Sh21 billion claim reserves were suspicious and potentially fraudulent. However, Kenbright has dismissed these allegations as baseless and misleading.

The controversy centers around Muchere’s assertion that NHIF’s claim reserves, specifically the Incurred But Not Reported (IBNR) reserves, were improperly accounted for. IBNR reserves are financial provisions set aside by insurance companies to cover claims that have occurred but have not yet been reported. Muchere’s claims suggest that these reserves were manipulated and raised concerns about their legitimacy, particularly in the context of NHIF’s financial statements for the years 2020/2021 and 2021/2022.

In a statement, Kenbright vehemently rejected Muchere’s allegations. Paul Gondi, Chairman of Kenbright’s Board, described Muchere’s claims as “disinformation” and stressed that NHIF’s actions were in line with global best practices. Gondi clarified that the establishment of claim reserves, including IBNR, is a standard and prudent practice for insurance companies worldwide. He pointed out that Kenyan law mandates insurance firms, including medical insurers like NHIF, to maintain such reserves.

Gondi further elaborated that NHIF’s decision to set aside claim reserves in 2021 was not only compliant with International Financial Reporting Standards (IFRS) but also a step towards financial transparency and accuracy. The reserves, according to Gondi, provided a more accurate reflection of NHIF’s financial position and adhered to international best practices.

Kenbright’s response highlights a broader issue of financial literacy and transparency in the insurance sector. Gondi called on regulatory bodies such as the Insurance Regulatory Authority (IRA), The Actuarial Society of Kenya (TASK), and the Media Council of Kenya (MCK) to enhance public understanding of financial practices and the importance of reserves in insurance.

Muchere’s claims have sparked significant attention, leading to a Parliamentary inquiry into NHIF’s financial practices. According to Muchere, the sudden appearance of IBNR reserves in the financial year ending June 2022 raised questions about their legitimacy and the authenticity of the figures reported. He criticized NHIF for failing to account for IBNR reserves in previous years and suggested that the figures could have been manipulated to obscure financial realities.

The MPs have now invited both Kenbright and NHIF’s top management to provide further explanations. The parliamentary investigation aims to clarify the situation and ensure that NHIF’s financial practices are transparent and in compliance with regulatory standards.

Kenbright’s defense underscores the importance of adhering to established financial practices and the need for clear communication in addressing public concerns. As the inquiry progresses, it will be crucial for all parties involved to present accurate information and maintain transparency to uphold public trust in the financial and insurance sectors.

In summary, Kenbright’s response to Muchere’s allegations reaffirms the legitimacy of NHIF’s claim reserves and emphasizes the importance of financial prudence and adherence to international standards. The ongoing parliamentary inquiry will further examine these claims to ensure clarity and accountability in NHIF’s financial management.