Auditor-General Nancy Gathungu has flagged the Sh6.3 billion spent in the provision of insurance cover for police and prison officers, citing irregularities.
Auditor-General Nancy Gathungu has flagged the Sh6.3 billion spent in the provision of insurance cover for police and prison officers, citing irregularities.
These include nonpayment of claims despite requests being lodged.
The revelations by Ms Gathungu raise fears that the 141,961 principal members and their beneficiaries may have gotten a raw deal in the contract that the National Police Service (NPS) awarded to a private insurance company.
Ms Gathungu, in an audit report on the accounts of the NPS for the 2023/24 financial year currently before parliament, reveals that the accounting officer, Ms Bernice Lemedeket, failed to monitor the implementation of the public funds as required by the law.
“The management did not adequately monitor the contract to ensure that the contract terms were complied with and ensure value for money and benefit to the members and their beneficiaries,” the audit report states.
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In 2023, NPS contracted the National Health Insurance Fund (NHIF) for the provision of the cover to the uniformed officers, which then partnered with a consortium of insurance companies to provide the cover.
The cover involved provision of Group Life cover, Work Injury Benefit Act (Wiba) and Group Personal Accident (GPA) at an annual premium of Sh5.08 billion covering the 141,961 principal members and their dependents.
They included 109,557 police officers and 32,404 prison officers. The contract period was one year covering January 1, 2023, to December 31, 2023.
Upon expiry, the contract was later extended for a further three months to March 2024 at a premium of Sh1.3 billion.
Claims unpaid
Ms Gathungu notes that a review of insurance records revealed irregularities that include unpaid claims relating to Group Life benefits, injury GPA and Wiba claims.
The Auditor-General, Nancy Gathungu, when she appeared before the County Public Investments and Special Funds Committee (CPIC) chaired Otieno Kajwang at the Bunge Tower Nairobi on Tuesday, March 4, 2025.
For instance, the contract provides that where a member is out of work as a result of an injury or illness, such members shall be entitled to compensation for loss of gross salary up to a maximum period of two years.
This is subject to the prevailing Human Resource (HR) policy at the time of injury or illness.
The audit reveals that a review of insurance records revealed that as of the time of the audit, the insurer had not settled 262 unpaid GPA claims despite having been notified.
Clause 2.3.1 of the contract provides that upon the death of a member, the member’s declared next of kin shall be paid a lump sum compensation equivalent to five years' annual basic salary.
“As at the time of the audit, insurer had not paid 21 claims worth Sh43.5 million in respect of group life sum assured,” the audit states adding; “this was contrary to the contract terms which states that claims shall be paid within five days after notification and provision of all documents.”
The contract also provides that temporary disablement shall be compensated through a periodical payment equivalent to the member’s salary.
“Periodical payments shall be made for as long as the temporary disablement continues but not for a period that exceeds 12 months,” the contract reads.
But according to the Auditor-General, a review on insurance records revealed that as at the time of the audit, the insurer had not settled 509 Wiba claims and two Wiba deaths.
This is against the contract provisions, which state that death or total disablement under Wiba or as a result of occupational accident shall be compensated at a rate of 8 years gross salary of the beneficiary.
