Kenya Insurance Industry Report 2025: Trends, Regulations, and Market Growth | Step by Step Insurance

A Step by Step Insurance Industry Insight

Introduction: Why This Report Matters

Over the last year, insurance in Kenya has changed—quietly but significantly. Premiums grew, claims increased faster than expected, regulations tightened, and technology reshaped how Kenyans buy and use insurance. Yet for many individuals and businesses, insurance still feels confusing, expensive, or unreliable.

At Step by Step Insurance, we believe insurance should be simple, transparent, and dependable. This report breaks down what actually happened in the Kenyan insurance industry in 2024–2025—and what it means for you as a policyholder, business owner, or decision-maker. No jargon. No guesswork. Just facts—explained clearly.

The Big Picture: Kenya’s Insurance Industry at a Glance

Kenya’s insurance market continued to grow in 2024–2025, but growth came with pressure.

• Total industry premiums increased by over 10%
• Claims rose even faster, especially in medical and motor insurance
• Insurance penetration remained low, at about 2.4–2.5% of GDP
• Regulators increased scrutiny to protect policyholders

In short: insurance is growing, but trust and profitability are being tested.

How the Insurance Industry in Kenya Is Structured

Kenya’s insurance industry has two main segments:

1. General Insurance

This covers everyday and business risks such as: Motor insurance, Medical insurance, Property and fire insurance, Marine, aviation, and transit, Liability covers, Agricultural insurance.

2. Long-Term Insurance

This focuses on future financial security, including: Life insurance, Pensions and retirement plans, Annuities, Investment-linked policies.

The industry is regulated by the Insurance Regulatory Authority, while insurers are represented by the Association of Kenya Insurers.

Market Performance: Growth That Came at a Cost

Premium Growth

Insurance premiums continued to rise across most classes.

Growth was driven mainly by: Life insurance and pensions, Medical insurance, Microinsurance products. However, higher premiums did not automatically mean higher profits.

Claims and Profitability

Claims increased faster than premiums, which squeezed insurers’ margins. Key realities:

• Medical insurance recorded the highest claims
• Motor insurance remained structurally loss-making
• Fraud and legal costs continued to affect pricing

As a result, overall industry profits declined despite stronger investment income. What this means for policyholders: Insurers are becoming stricter on underwriting, pricing, and claims documentation—not to frustrate customers, but to stay solvent.

Regulation: Stronger Rules to Protect Policyholders

One of the most important shifts in 2024–2025 was tighter regulation.

Risk-Based Supervision

The regulator continued implementing risk-based supervision, meaning insurers are now assessed based on: Financial strength, Governance quality, Risk exposure. Insurers with weak capital or poor management face corrective action, mergers, or exit.

Claims Management Reforms

Draft claims guidelines were introduced to address one of the biggest complaints in insurance: delayed or rejected claims. Proposed changes include: Clear timelines for claim acknowledgment, Faster decision-making, Limits on unfair claim repudiation.

At Step by Step Insurance, this aligns with what we already believe: 👉 Insurance only matters when claims are paid fairly and on time.

Governance, Data, and Consumer Protection

Other regulatory priorities included: Stronger board oversight, Improved internal controls, Greater accountability for directors, Higher expectations on data protection and cybersecurity. These reforms aim to rebuild public confidence in insurance.

Industry Consolidation: Fewer but Stronger Players

The past year saw notable restructuring. Some insurers exited unprofitable segments, others merged or sold stakes to regional and global groups, and banks expanded into insurance through bancassurance. This trend is reducing weak players while strengthening financial stability across the market.

For customers, this means: Better-capitalized insurers—but also more disciplined underwriting.

Sector Performance: What Changed and Why It Matters

Life Insurance and Pensions

Life insurance remained one of the strongest performers. Growth drivers included: Employer-provided group life cover, Increased pension contributions, Rising awareness of retirement planning. For individuals, this reflects a growing shift toward long-term financial security.

Medical Insurance: Growth with Pressure

Medical insurance was the largest contributor to claims. Challenges included: Rising hospital costs, Increased utilization, Fraudulent billing in some facilities. Insurers responded by: Reviewing benefit limits, Introducing co-payments, Strengthening provider controls. What this means for you: Medical insurance remains essential—but choosing the right cover matters more than ever.

Motor Insurance: The Toughest Segment

Motor insurance continued to struggle. Key issues: Bodily injury claims inflation, Fraudulent accident claims, Court awards exceeding actuarial pricing. Insurers introduced: Flexible monthly payment options, Usage-based concepts (limited adoption), Stricter underwriting. Motor insurance remains compulsory—but pricing is becoming more risk-based.

Agricultural Insurance: Growing Through Innovation

Agricultural insurance expanded through index-based cover, especially for: Drought, Excess rainfall, Livestock losses. Government-supported premium subsidies helped smallholder farmers access protection that was previously unaffordable.

Microinsurance: Insurance for Everyday Kenyans

Microinsurance grew rapidly, targeting: Informal workers, Small traders, Low-income households. Features include: Very low premiums, Mobile enrollment, Simplified claims. This segment is key to closing Kenya’s insurance gap.

Technology and Digital Insurance

Digital transformation accelerated across the industry. Key developments: Online policy purchase and renewal, Mobile apps and USSD platforms, Embedded insurance via fintech partnerships. Technology is making insurance more accessible, but it also increases cyber and data risks—hence tighter regulation.

Fraud, Compliance, and Enforcement

Fraud remains a major challenge, especially in: Motor insurance, Medical insurance, Fake insurance certificates. While reported fraud cases declined slightly, enforcement actions increased: Prosecutions, License suspensions, Statutory management of failing insurers. Fraud ultimately hurts honest policyholders through higher premiums—making enforcement essential.

Consumer Trust and Behavior

Why Trust Still Matters

Many Kenyans still associate insurance with: Complicated terms, Delayed claims, Unclear exclusions. Regulatory reforms and better claims processes aim to change this narrative—but trust must be earned.

Youth, SMEs, and Insurance Uptake

Young people and small businesses remain underinsured due to: Cost concerns, Limited understanding, Perceived complexity. Insurers are responding with simpler, modular products—but education remains critical.

Challenges Facing the Industry

The main obstacles going forward include: Low insurance penetration, Medical inflation, Fraud and litigation costs, Compliance costs, Economic uncertainty. These challenges explain why insurance prices are adjusting—and why quality advice matters.

Opportunities and the Road Ahead

Despite the challenges, opportunities remain strong.

Growth Areas

Microinsurance, Embedded and digital insurance, Climate and agricultural insurance, SME-focused solutions.

What Policyholders Should Expect

More transparency, Faster claims processes, Better-defined covers, Risk-based pricing.

Final Thoughts: Insurance That Actually Works

The Kenyan insurance industry in 2025 is stronger, more regulated, and more innovative—but still evolving. At Step by Step Insurance, our role is simple: Help you understand your cover, Match you with the right insurer, Support you through claims, Make insurance work when you need it most. Because insurance shouldn’t be confusing. It should be step by step—clear, fair, and dependable.