[Microinsurancefocus] Microcare's response

Tue Apr 7 14:55:38 CEST 2009

Dear all
In the interests of balancing out the discussion, I attach Microcare's response
to the article in New Vision Uganda.
regards,
Craig Churchill

******************************************

International Labour Organization
Social Finance Program
4 route des Morillons, CH-1211 Geneva 22
Switzerland
Email churchill at ilo.org 
Tel 41 22 799-6242
Fax 41 22 799-6896
www.ilo.org/socialfinance 

For details about the ILO's Microinsurance Innovation Facility, see:
www.ilo.org/microinsurance 

>>> "Richard Leftley" <richard.leftley at microensure.com> 02.04.2009 11:42 >>>

Dear Jim

I also received it through a web-search that sends me articles relating to
“micro” insurance generally. It was an article published in the New Vision
news paper which is one of the big national daily papers in Uganda. The article
was on the front page of the paper I believe a week or so ago. I have no doubt
that there are always two sides to a story and I also have no doubt that editors
globally tend to print stories that highlight issues in the worst light possible
because that is how they sell newspapers! 
Putting the specifics to one side, I do think that the Micro Insurance Network
steering committee might put some thought into what the role of the MiN is in
the public arena. It is inevitable that in the future there will be some bad
press about micro insurance and the way that the industry body responds at that
time will be critical and it will need to be timely so having something ready to
go which states industry facts will be critical.

Thanks

Richard Leftley

President & CEO

Telephone: +1 630 687 1950
Mobile: +44 (0)7800 593 604
Skype: richard.leftley
Email: richard.leftley at microensure.com 
Web: www.microensure.com ( http://www.microensure.com/ )

From:microinsurancefocus-bounces at microfinance.lu
[mailto:microinsurancefocus-bounces at microfinance.lu] On Behalf Of Jim Roth
Sent: 01 April 2009 23:21
To: microinsurancefocus at microfinance.lu 
Subject: Re: [Microinsurancefocus] Microcare in financial crisis

I received earlier today an unsolicited letter from "Fnu Snu" with a negative
newspaper article from New Vision attached. I sent a reply asking who Fnu Snu is
and why they sent me this unsolicited email. I received no response. My
suspicion is that this letter and its contents are malicious. I am reasonably
well acquainted with Microcare and the information contained in the newspaper is
considerably at variance with my own knowledge of Microcare and its status. I
look forward to reading Microcare's reply to what appears to be the systematic,
unsolicited and anonymous spreading of dubious information. I should add that I
don't have a lot of knowledge about the local papers in Uganda; but I am not
inclined to believe in the verification procedures or propensities of a
newspaper that today moved on to campaign for outing gay priests.

2009/4/1 Fnu Snu <snu_fnu at yahoo.com>

Microcare in financial crisis

By Barbara Among, New Vision Uganda

MICROCARE, Uganda’s biggest health insurance company, has been struck off the
list of licensed insurance companies. The company, that covers 70,000 people in
a network of 157 health facilities across the country, is facing a financial
crisis, in which over a dozen health service providers are demanding over sh2bn
in unpaid bills. 

The health providers on Wednesday filed a case in the High Court, seeking to
wind up the company.

In a public announcement on February 27, 2009, the Uganda Insurance Commission
drew a list of authorised insurance companies and warned the public against
dealing with unlicensed insurers, insurance brokers, agents, loss adjusters,
assessors and insurance surveyors. 

The commission listed five life insurance companies, 18 life insurance brokers
as well as 19 non-life insurance companies, non-life insurance brokers.
Microcare Insurance Limited never featured on any of the lists.

The Commission’s acting boss, Evelyn Nkalubo-Muwemba, said Microcare,
incorporated in Uganda in June 2004, had failed to meet some licensing
requirements. “But as soon as the company meets this, we will licence it,” she
said.

For a company to be licensed, Nkalubo-Muwemba explained, it should have met
criteria such as the sh1b security deposit with Bank of Uganda, sh2.5b in case
of reinsurance business, approval by the insurance association, the COMESA
yellow card requirement, authorised share capital and paid up share capital. 

Microcare however insisted that they have complied with all the Commission’s
requirements for the renewal of their license.

“The Uganda Insurance Commission has not revoked or stopped Microcare from
transacting insurance business,” said the marketing manager, Clare Tumwesigye.

“It should be noted that it is normal for a company not to be advertised if the
regulatory body is still pursing some administrative processes. We are in touch
with the commission regarding our license of 2009 and would not like to divulge
the details of our discussions but you are free to inquire from it (the
commission) if we have been stopped from transacting insurance business,” she
added.

Tumwesigye dismissed allegations that they owe health service providers
billions of shillings.

She said: “Microcare handles volumes of data processed every day and this is
bound to cause friction some times, which leads to reconciliation meetings of
accounts, which is what we are doing with some clinics. We do not want to
discuss our service providers’ business in the press. 

Investigations by Saturday Vision however revealed that some of the health
service providers have suspended their services to patients under the Microcare
health insurance scheme. Some of the clinics have also either taken legal action
or are planning to do so to recover the money the health insurance owes them.

The first client to drag Microcare to court was Kadic Hospital in Bukoto, for
non payment of up to sh150m, allegedly accumulated over three years. Microcare
has since paid sh60m, leaving a balance of sh90m. The company also owes Case
Clinic, sh700m, Paragon Hospital, sh770m, Mulago Hospital private wing, sh180m
and Kampala Family clinic sh60m. 

Others are Gulu Independent Hospital, sh150m, Mbarara Community Hospital,
sh67m, St. Catherine Clinic, sh108m, Byansi Clinic, Masaka, sh8m and Rubaga
Hospital, sh30m. Gulu Independent Hospital is the latest on the list to serve
the company with a notice to sue. 

Also owed unspecified amounts are Nsambya hospital, Bugolobi nursing home, SAS
clinic, Mayanja Memorial Hospital, Pan Dental Surgery, Victoria Medical Centre
and Nakasero Hospital among others. The other service providers that have
suspended their services with the company over unpaid bills include Abii Clinic
and Laboratory Services, Victoria Medical Centre and Friecca Pharmacy in
Wandegeya.

The Microcare financial crisis comes at a time when the Government is planning
to introduce a Social Health Insurance Scheme. 

Ten of the affected health service providers have engaged Kizito, Lumu and
Company advocates of Kampala seeking protection from the Uganda Insurance
Commission. The health service providers have also filed a case at the High
Court seeking to wind up Microcare.

Five companies acting as one 
Health service providers are complaining that there are five companies using
the name Microcare and acting as one entity. A look through the letters sent or
agreement signed between several companies and Microcare, spells different
names. There is Microcare, Microcare Health, Microcare Health Ltd, Microcare
Insurance and Microcare Insurance Ltd. 

The health service providers now fear that the company could easily close shop
without paying what is due to them. “The Uganda Insurance Commission should
inform us and the general public which company is registered under the laws of
this country with the Insurance Commission to offer insurance cover to the
public so that the public and other companies are protected from becoming
victims as our clients are, currently,” the lawyers demanded.

To compound their worry further, the service providers said they  do not know
whether it is a registered insurance company since its files went missing from
the registrar of companies.  Further complicating matters are clauses in the
agreement signed between health service providers with Microcare, which prevents
them from directly reaching to Microcare clients. It also stipulates that
Microcare has the right to reject a bill if the drug provided for is not
agreeable to them, if doctor exaggerates a bill and when a hospital treats
congenital illness. 

“In accordance with the agreements, our clients have fulfilled their part and
to their dismay, the insurance company has consistently failed to honour their
part,” the lawyers complained to the Commission. 

They claimed that Microcare has placed the bills under quarantine, instead of
paying them. This, they said, was a breach of contract. 

However, Microcare blames the delay in settling bills on incorrect or
exaggerated bills. The hospitals dismissed this accusation. They said the
Microcare desk at hospitals and clinics verifies the bills before any treatment
is provided. 

Affecting Operations 
Saturday Vision has learnt that a number of private health centres wallow in
debt, some of them resulting from heavy borrowing forced on them after insurance
firms delayed to settle medical bills. Some facilities have either scaled-down
their operations, are contemplating shutting down, or are shopping for investors
to re-capitalise and resuscitate the businesses.

The Microcare mess is just one of the troubles facing health service providers.
Several botched medical insurance schemes and expensive bank loans have pushed a
number of up market private hospitals into financial difficulties. 

For instance, the Uganda Revenue Authority (URA) recently almost closed down
Kadic Hospital in Bukoto. The URA also raided the accounts of Paragon Hospital
due to non-remittance of PAYE, exceeding sh79m. 

“You send a bill of sh15m, they give you only sh8m. Each time you send them a
bill, they retain a certain fee and eventually you find the bill accumulating,”
said an executive director of a hospital. 

Hospitals and clinics complained that these companies take several months, at
times years, before settling their bills. The general contract with insurance
companies is that they pay within 30 days of submitting an invoice, but many
insurance companies take as long as 4-6 months before paying. 

In turn, the hospitals borrow from banks at high interest rates to meet
operational costs. 

Weak health insurance sector 
The scrapping of Microcare leaves only two companies, Medicare (under East
African Underwriters) and Liberty (under Standard Bank Group of South Africa
that trades here as Stanbic)  licensed to provide medical insurance. 

There are also Health Maintenance Organisations (HMOs) that operate in a way
similar to health insurance companies – taking funds from individuals and
companies to provide medical services in the long-term. Currently there are five
HMOs in Uganda: Africa Air Rescue (AAR), International Health Network (IHN),
International Air Ambulance (IAA), Kadic Health Foundation (KHF) and Case
Medicare. However, their services are not regulated by any law. 

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Mob:  +44 7914 397 314
e-mail: jimroth at leapfroginvest.com 

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