A brewing policy conflict has emerged within the government over how civil servants’ injury and insurance compensation claims should be handled, raising questions about legality and financial oversight.
The debate comes after contradictory positions surfaced in letters from the National Treasury and the Public Service ministry regarding the management of such claims.
Public Service PS Jane Imbunya proposed the creation of a Sh1.2 billion internal compensation fund within her ministry, citing Executive Orders and a section of the Work Injury Benefits Act (Wiba) that allows for a self-insurance model.
In her July 17 letter to the Treasury, she argued that the move would centralize administration and ensure comprehensive coverage for civil servants, teachers under the Teachers Service Commission, and police for “parity of treatment and ease of administration.” She also suggested relocating the existing GPA/Wiba unit from the Treasury to her ministry.
“The Executive Order No1 of 2023 places the administration of insurance and welfare programs for the civil service, including comprehensive group life, last expenses, work injury benefits and group personal accident insurance cover under the Ministry of Public Service,” Imbunya wrote.
However, Treasury Principal Secretary Chris Kiptoo contradicted this proposal in a July 1 letter to the Social Health Authority (SHA), stressing that the authority is legally mandated to handle work injury compensation claims.
He highlighted that the government had already remitted Sh1.58 billion to reduce an outstanding premium of Sh8.14 billion under the existing SHA contract.
“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,” Kiptoo said.
He added that settling claims through SHA is crucial to “restore confidence in the programme” and that reputable reinsurance partners had been engaged to strengthen the initiative.
The plan to create a ministry-based fund has drawn sharp criticism from MPs, who argue it violates existing law.
Kitutu Chache South MP Anthony Kibagendi and Makueni Senator Daniel Maanzo described the proposal as “a return to illegality,” noting that it contravenes the Insurance Act, the WIBA Act, and the Public Service Superannuation Scheme Act.
“Creating a ministry-based fund is a return to illegality and a blatant abuse of public funds. We will reject it,” Kibagendi said. Maanzo added: “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.”
Concerns extend beyond legality. Former Public Service CS Justin Muturi warned that a parallel fund lacks actuarial and regulatory oversight, leaving it vulnerable to fraud and mismanagement.
“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,” he said.