On Statistical Analysis of Fraud Risk and Preventive Care as Determinants of Claim Severity in the Kenyan Retail Health Insurance

Retail health insurance in Kenya faces growing challenges from rising healthcare costs, fraudulent claims, and limited adoption of preventive care. These factors increase premiums, reduce affordability, and hinder private insurance uptake compared to public schemes. This study evaluates the impact of fraud and preventive healthcare on claim severity, alongside demographic and behavioral influences. Using Pearson correlation and Generalized Linear Models (GLM), relationships between fraud incidence, preventive care participation, and selected demographics were analyzed, with significance tested through p-values and R-squared metrics. Findings reveal that fraud markedly raises claim severity, inflating costs and undermining sustainability, while preventive care reduces long-term claim costs. Demographic and behavioral factors show some influence on claim behavior but remain less significant than fraud and preventive care. The study concludes that incorporating fraud detection and preventive healthcare into actuarial pricing models can enhance affordability and sustainability of retail health insurance in Kenya, providing valuable guidance for insurers and policymakers.