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Health insurers lose $160 million to fraud

CIMAS CEO Vulindlela Ndlovu says the health insurance industry in Zimbabwe could be losing $160 million annually through fraud, errors and leakages.

BY FIDELITY MHLANGA

Ndlovu told journalists attending the Zimselector mentorship programme on Friday that about $32 million worth of claims made by Cimas clients annually were fraudulent or had errors.

“If Cimas accounts for about 20% of the medically insured (public service taking about 60%), then the medical fraud damage in Zimbabwe is just about $160 million drain countrywide,” he said.

Fraud (error, waste, leakages, abuse) is a violation of trust that, in general, refers to an act committed to secure personal or financial advantage.

Its prevalence in the medical field is estimated at 30%-40% of medical aid claims in southern Africa and 10-20% globally.

The revelations by Ndlovu followed disclosures by the Insurance and Pension Commission that the local insurance industry was losing close to $165 million annually through fraudulent activities.

Medical aid societies are regulated by the Health and Child Welfare ministry although experts say the government does not have institutional capacity to monitor health insurance.

In 2017 the government gazetted bills to establish the Medical Aid Societies Regulatory Authority and also to amend the Medical Services Act.

The industry is also advocating for once-off registration and annual subscriptions to allow for business continuity.

Ndlovu said Cimas’ position was that compliance orders must only be made by a court of law because independent enquiry and the recommended tariffs constituted unfair trade practices and must be removed.

Insurance Council of Zimbabwe chairperson Musa Bako said a mere 1,3 million people were covered by health insurance in Zimbabwe.

“Out of 14 million people in Zimbabwe only 1,3 million have health insurance and this represents about 9% of the population,” Bako said in a speech read by Nigel Mugwendere, an insurance industry expert.

“It’s usually employer-driven where in some cases the employer pays 100% while in other cases the employer pays a little bit.”

In 2016 health funders paid over $324 million to service providers in Zimbabwe.

“Challenges in the industry are to do with the macroeconomic environment,” Mugwendere said.

“Due to the high rate of unemployment, the last thing a person thinks about  is getting medical aid because the primary concern is putting food on the table and a roof over their heads.

“The informal economy makes it difficult to have structured contribution for medical insurance,” Mugwendere said.

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