MPs have faulted the government’s move to allocate Sh1.2 billion for the settlement of civil servants’ injury and accident claims, saying it contravenes existing laws.
The lawmakers say the initiative by the Ministry of Public Service is tantamount to running an insurance business outside the legal framework established under the Social Health Authority (SHA).
The State initiative is to be administered through a newly created internal compensation fund housed within the State Department for Public Service, as it emerged that Sh7.6 billion in claims remains unresolved with the National Treasury yet to disburse the funds to SHA.
While the initiative to allocate the funds may be intended to provide relief for long-standing civil servant claims, Kitutu Chahe South MP Anthony Kibagendi and Makueni Senator Daniel Maanzo warn that it seeks to reintroduce an illegality the government abandoned eight years ago through a Cabinet decision.
This, even as immediate former Public Service Cabinet Secretary Justin Muturi, also the immediate former attorney-general, warned that the initiative exposes public funds to potential fraud and mismanagement, particularly in the absence of actuarial and regulatory oversight.
Mr Kibagendi and Mr Maanzo specifically noted that without alignment to the existing laws- the Work Injury Benefits Act (Wiba), the Insurance Act, and the Public Service Superannuation Scheme (PSSS) Act, the initiative exposes the government to litigation, financial risks and policy incoherence.
Makueni Senator Daniel Maanzo.
Photo credit: File | Nation
“Creating a Ministry-based fund is a return to illegality and a blatant abuse of public funds. We will reject it,” said Mr Kibagendi.
The law requires that settlement of claims, which the dependents, widows and injured officers desperately need, be done through properly established and regulated insurance mechanisms- SHA.
Mr Maanzo questioned the initiative, noting that “however good as it sounds,” the premiums for medical, Life, Wiba, Group Personal Accident (GPA) and Last Expense covers have already been remitted to SHA.
“Why is the government creating a parallel initiative for compensation of public servants? As of now, it is only SHA, which has the legal mandate, capacity, and data to manage these benefits,” said Mr Maanzo.
Mr Muturi said that if the scheme is endorsed by President William Ruto and implemented, trustees may face liability, and beneficiaries may continue to suffer delays with the government credibility at stake.
“Setting up a parallel process for employee benefits not only fragments accountability and delays justice for principal members and their families but also undermines efficiency,” Mr Muturi, the immediate former Speaker of the National Assembly, cautions.
Former CS Justin Muturi.
Photo credit: . Lucy Wanjiru | Nation Media Group
On July 17, 2025, Public Service Principal Secretary Dr Jane Imbunya wrote to her Treasury colleague Dr Chris Kiptoo announcing that claims under Wiba, GPA and Last Expense, will be settled through a new fund under her Ministry, replicating the defunct GPA Operations Unit.
The GPA Operations Unit was, however, declared illegal in 2017 after amendments to the Insurance Act criminalised unlicensed insurance operations.
“As per the Wiba Act 2007, which allows a self-insurance model of claims arising from injuries/ deaths for civil servants, the compensation be undertaken by the Ministry responsible for Public Service and the required resources be provided,” PS Imbunya says in the letter.
The Public Service PS further proposed that SHA provide a comprehensive report detailing the biodata of the officers who have been compensated, pending and rejected claims for the financial years 2021/22, 2022/23 and 2023/24.
Section 7 of the Wiba Act states that every employer shall obtain and maintain an insurance policy, with an insurer approved by the Cabinet Secretary in respect of any liability that the employer may incur under this Act to any of his employees.
Dr Imbunya did not respond to our inquiries on whether the proposed fund under her Ministry will have actuarial and regulatory oversight to safeguard public funds from risks of misuse or fraud.
Mr Kibagendi notes that the PS cannot claim to be offering a genuine solution when premiums for medical and related covers have already been remitted to SHA.
Dr Imbunya’s proposal came just days after Dr Kiptoo in a letter to SHA CEO Dr Mercy Mwangangi spoke of the importance of settling the Sh6.6 billion owed to public servants.
In the July 1, 2025 letter, Dr Kiptoo noted that it is important to expedite settlements of claims owed to public servants and their families so as to “demonstrate that their well-being remains a top priority to restore confidence in the programme”.
“As you are aware, the government partnered with NHIF, now SHA, to provide vital insurance cover- Group Life, Last Expense, Wiba and GPA for our civil servants and National Youth Service (NYS) for the periods 2020/21, 2022/23 and 2023/24,” Dr Kiptoo says in the letter copied to Dr Imbunya.
“The initiative reflects our shared commitment to safeguarding the well-being of public servants and their families. In line with the regulatory guidance from the Insurance Regulatory Authority, NHIF engaged reputable reinsurance partners to strengthen the programme’s resilience and reach,” Dr Kiptoo’s letter adds.
In 2012, the government created the GPA Operations Unit at the Treasury, supported by an operational framework to manage insurance, claims settlement and premium collections.
But in 2017, the Statute Law (Miscellaneous Amendment) Act amended Section 20 (4) of the Insurance Act, criminalising insurance-related activities by unlicensed entities with penalties of up to Sh10 million or five years’ imprisonment for contraventions.
Following the amendments, Cabinet Memo CAB (17) 60 disbanded the GPA Unit and transferred responsibilities to NHIF, supported by Gazette Notice No. 4240, granting exemption under the Insurance Act.
In 2020, NHIF entered into cooperation agreements with commercial insurers to provide enhanced risk covers, including Covid-19, a global exclusion at the time.
In November 19, 2019, the Health CS Sicily Kariuki wrote to her then National Treasury colleague Ukur Yattani, requesting that the National Health Insurance Fund (NHIF), succeeded by SHA, be exempted from the provisions of section 19 of the Insurance Act.
Section 19 of the Insurance Act provides that a firm providing insurance services in the country must be registered with IRA.
NHIF was not registered under the Act despite earning billions in insurance premiums from the police, prisons and civil servants and other bodies, including parastatals and private entities.
Mr Yattani would later bow to pressure, exempting NHIF from the requirement that binds commercial insurance providers, paving the way for the government agency to engage in commercial insurance business.
According to the Wiba Act, employers are required to maintain insurance policies with approved insurers and where exemptions apply, employers must secure surety undertakings, a safeguard Dr Imbunya has been accused of ignoring.
The Insurance Act criminalises unlicensed insurance operations- both claims settlement and premium handling are expressly defined as insurance functions.
The PSSS Act mandates the government to take and maintain life and disability insurance policies but not to self-administer them.
The Public Service Human Resource manual stipulates that WIBA, GPA, Group Life, and Last Expense benefits must be managed under regulated insurance frameworks.
