IRA Plans First Insurance Fee Increase in 30 Years — What It Means for Kenya’s Insurance Industry

For the first time in nearly three decades, Kenya’s Insurance Regulatory Authority (IRA) is proposing a sweeping increase in annual fees for insurers, reinsurers, brokers, and agents. The adjustment — the first since 1995 — aims to align the insurance industry’s regulatory costs with modern realities. But as industry players brace for higher operational expenses, the big question is: Will policyholders end up paying more for insurance?

Why the Fee Adjustment Was Long Overdue

The IRA’s move comes after 30 years without any fee revision, even as Kenya’s insurance market expanded dramatically. Since the 1990s, the sector has grown from fewer than 600 registered entities to over 14,000 intermediaries and service providers, including insurers, agents, and brokers. Yet, the fees they pay to the regulator have remained stagnant despite rising inflation and administrative demands.

According to the National Treasury’s Regulatory Impact Assessment Report, the outdated structure no longer supports the cost of effective supervision, compliance monitoring, and consumer protection. Simply put — the system hasn’t kept up with the times.

Key Highlights of the Proposed Fee Changes

Under the new proposal, both licensing and annual operating fees will rise significantly for all insurance industry players. Below is a summary of the current and proposed charges:

(Source: IRA Draft Proposal, 2025)

The IRA argues that these rates reflect today’s economic realities and will help fund better oversight and digital transformation across the sector.

What’s Driving the Increase?

Several factors have influenced the IRA’s decision:

Inflation and currency depreciation

The cost of running a regulatory body has increased drastically since 1995.

Market expansion

The number of licensed entities has grown more than 20 times, requiring more robust monitoring systems.

Complexity of insurance products

With new digital, micro, and niche insurance services, supervision has become more technical and expensive.

Alignment with regional peers

Kenya’s fees were previously among the lowest in East Africa compared to Uganda and Tanzania.

In essence, the increase aims to ensure the IRA can continue protecting consumers and maintaining market stability in a fast-changing financial environment.

How the Changes Could Affect Stakeholders

a. Insurers and Reinsurers

For big insurance companies, the higher fees may be a manageable adjustment. However, smaller firms could struggle with compliance costs, potentially leading to industry consolidation as companies merge or exit the market.

b. Insurance Brokers and Agents

Agents, brokers, and bancassurance intermediaries face the steepest hikes — up to 10 times more than current rates. For individual agents, this could raise barriers to entry, especially in rural areas where margins are already tight. The result may be fewer independent agents, and possibly, reduced competition.

c. Policyholders

For everyday Kenyans, the most noticeable effect could be higher insurance premiums. As insurers pass on part of their increased operating costs to customers, households and businesses may soon pay more for motor, medical, or business insurance covers. This move could temporarily slow down insurance uptake, particularly among price-sensitive customers.

Treasury and IRA’s Perspective

The National Treasury and Insurance Regulatory Authority emphasize that the new fee structure is not meant to punish the industry — but to modernize it. According to the Treasury’s report, the changes are designed to:

• Enhance regulatory oversight and consumer protection.
• Ensure financial sustainability of the IRA.
• Strengthen digital supervision systems.
• Keep Kenya’s insurance framework aligned with global best practices.

The proposal is currently open for public consultation, allowing industry stakeholders to submit feedback before it is gazetted and implemented.

Industry Reactions and Concerns

Reactions within the insurance sector have been mixed.

Some experts argue that the increase is long overdue and will ultimately lead to a stronger, more credible industry.

Others warn that the sharp jump — especially for intermediaries — could disrupt small agencies and brokers, leading to job losses or reduced coverage access in lower-income areas and rural Kenya.

The Association of Kenya Insurers (AKI) and other professional bodies are expected to engage the Treasury and IRA to ensure the final structure balances regulatory needs with business sustainability.

What Happens Next

The proposed changes are still at the draft stage, pending public input and final approval. Once adopted, the new rates could take effect in early 2026, following a transitional grace period to allow companies to adjust. Intermediaries are encouraged to start budgeting for compliance and reviewing their business models to absorb the added costs efficiently.

Will Premiums Really Rise?

While not guaranteed, higher premiums appear likely — especially in the short term. Insurers may initially raise policy prices to offset new expenses. However, in the long run, a more efficient and well-funded regulator could lead to better consumer protection, fairer claims processing, and stronger industry trust. In short: short-term pain, long-term gain.

Conclusion

Kenya’s insurance industry is entering a new era. After 30 years without adjustment, the IRA’s proposed fee increase marks a major shift toward sustainability and stronger regulation. For insurers, it’s time to prepare for higher compliance costs. For intermediaries, it’s a wake-up call to modernize and scale. And for consumers, it’s a reminder to stay informed — and choose trusted partners who prioritize value and transparency.