‘Agrahara’ becoming yet another burden to State coffers, warns AG

• Says it failed to get all public officers contributing to the Fund
• A survey conducted by AG’s Office shows 35% of public officers ignorant of the insurance scheme
• The Fund made profit of Rs.267 mn in 2014 with Treasury  contributions, and thereafter witnessed gradual profit decline
• AG deeply concerned about poor service standards and insurance claims processing efficiency

By Nishel Fernando
Engulfed with years of poor planning, execution coupled with inefficient operations, Sri Lanka’s public sector health insurance scheme, Agrahara, partly funded by the Treasury, has been failing to achieve its key objectives while increasingly relying on State-coffers to stay afloat, Auditor General Department cautioned.

The Agrahara Insurance Scheme was initially introduced by the Ministry of Public Administration and Home Affairs in 1997, mainly aimed at the upliftment of livelihoods of all public sector officers, including provincial public officers and their family members.

In 2005, the government made it compulsory for all officers in public service, including the provincial public service, to subscribe to this scheme by contributing a premium of Rs.75 monthly with the Treasury contributing Rs.69 per officer.

“Even though, the objective of the Fund is to get all public officers contributing to the Agrahara Insurance Scheme, it failed to get all public officers contributing to the Fund,” the Auditor General, W.P.C. Wickramaratne said in a special audit report, which was submitted to the Parliament recently.

As at 30th June 2019, it was compulsory for 879,427 public servants to subscribe to the scheme, however, the Auditor General noted that only 743,973 public servants subscribed to it by end-June in 2019.

According to a survey conducted by the Auditor General’s Office, 35 percent of public officers weren’t even aware of the existence of this insurance scheme, although 665 awareness programmes had been conducted in 2018 and 2019 about the insurance scheme.

In 2006, Agrahara Insurance Fund was brought under the newly established National Insurance Trust Fund (NITF) Board from Sri Lankan Insurance. Subsequently, the monthly premium was increased to Rs.125.  Further, the Fund introduced two new voluntary Gold and Silver health schemes in 2016 subject to a monthly premium of Rs.600 and Rs.300 respectively, while expanding benefits offered by the schemes.

The Fund was able to earn a profit of Rs.267 million in 2014 due to contribution from the Treasury. However, since then, the profits went downhill gradually. As per the financial reports of the Fund, it incurred losses amounting to Rs.127 million and Rs.264 million in 2017 and 2018.

Meanwhile, Wickramaratne raised deep concerns on poor service standards and efficiency when processing insurance claims. 

Although, claims are required to be processed within 10 working days, there had been occasions where processing period had been dragging for five months and even by a year at times. 

In addition, Wickramaratne also highlighted a high number of claim rejections made by government servants.  
“The fund had not taken action to pay for 30,742 applications from 2003 to 2013 and 87,161 after the period from 2013 which had been identified as applications with errors, can be identified as a major problem,” he added. 

The Auditor General also pointed at wastages occurred in procuring E-cards and insurance cards at high costs with lack of planning.  “Sixty-five percent or 65,504 normal cards purchased in June 2018 and 37 percent of the gold cards purchased in February 2019 had remained in the institute even by 10 October 2019. Action had not been taken to input data into 13,750 cards as well. It was also observed that those cards had been stacked near the exit door of the building without any protection,” he elaborated.  He urged the NITF to conduct a formal inquiry concerning responsible parties who had purchased cards and machines uneconomically in 2012. Moreover, the Fund was yet to implement additional benefits and new initiatives announced in 2016 through a circular. In particular, Wickramaratne noted that the Fund is yet to pursue required steps to implement the loan insurance scheme. “Even though the new Agrahara Insurance Scheme commenced in 2016, the Fund had not taken action to conduct a formal analysis and implement it as a compulsory insurance scheme,” he noted. According to him, there were significant obstacles in conducting the audit as the Fund didn’t have proper methodology in record keeping of different insurance schemes and maintaining separate accounts of their clients. “Take steps to introduce a proper methodology on accounts being opened in the name of each member who had contributed to the Agrahara Insurance Scheme and maintain updating it,” the Auditor General urged in his report.