Insurance activities in Kenya have seen rapid expansion over the past decade, with the sector consistently witnessing double-digit growth. This is expected to continue on the back of overall economic expansion, a burgeoning middle class, untapped potential within the life insurance segment and new opportunities for project insurance. While hampered by low penetration and fraud, the country’s potential as a high-value destination for insurance investment has garnered international attention in recent years. An increasingly diverse array of offerings, enhanced focus on the life insurance segment and new fraud prevention measures, coupled with regional expansion of local companies, have given a promising outlook to future industry growth.

In Figures

A March 2014 study published by global consultancy A.M. Best reported that Kenya is the third-most-profitable insurance market in sub-Saharan Africa, and sixth on the continent, behind South Africa, Morocco, Egypt, Nigeria and Algeria. A.M Best reported that insurance premiums expanded by 21.9% in the country in 2012, just higher than figures from the Association of Kenya Insurers (AKI), which reported that gross written premiums (GWPs) rose by 15% in 2011 and 18.5% in 2012, reaching KSh108.54bn ($1.24bn).

“Kenya’s insurance sector has proved robust and resilient, despite there being many poor households. Premiums have been growing by double digits, fuelled mainly by the non-life sector, which makes up about 66% of total gross written premiums,” stated A.M. Best’s report, “Africa’s Market Review: Gearing Up for Sustained Growth”. The study further highlighted that Kenya’s penetration rate of 3.16% rivals that of many developed markets, and, according to the AKI, ranks higher in penetration than China, Russia and Mexico.

The AKI’s fourth-quarter 2013 industry report found that overall GWPs reached KSh131bn ($1.49bn) by the end of 2013, representing a 20.6% increase over 2012. Life insurance business comprised KSh44.3bn ($505m), or about 34% of the total, while the short-term, non-life segment reached KSh86.7bn ($998.4m) in 2013.

Growth Drivers

The Insurance Regulatory Authority’s (IRA) “2013 Industry Outlook” identified growth drivers that contributed to the year’s strong performance, including increased marketing, improved public awareness, staff service strategies, market research, dedicated management, product development and the automation of business processes. Using data from a survey of over 35 insurance CEOs, the report also identified future growth drivers, which include an overall rise in business volumes, development of new niche products and investments in product marketing.

At the same time, the report highlighted challenges that have had an influence on realisation of further gains in growth, including premium undercutting, high-value claims and settlements, delays in premium collection, HR gaps, fraud and poor customer retention. “Despite the growth, 2013 was still a tough year for the industry. Penetration remains low, and we’re all fighting for the same piece of cake,” Ashok Shah, group CEO of Apollo Investments, told OBG. The industry is moving to address these issues through uptake of new technologies and regulatory reforms, including a proposed New Insurance Act, which is expected to be ratified in 2014, but product diversification, life insurance expansion, and growth outside of Nairobi and into the East African Community (EAC) will be critical.

Long-term Segment

The long-term life segment holds considerable growth potential. Though currently standing at a penetration rate of just 1.08% of GDP, Standard Investment Bank projects the long-term segment will expand by 15% in 2014 to hit KSh47.21bn ($538.2m) in GWPs, followed by a further 15% rise in 2015 to reach KSh54.14bn ($617.2m.) Indeed, both the AKI and the IRA have targeted an increase in life premiums, generally more profitable and less susceptible to fraud and high loss ratios than the short-term segment, as an important avenue for sustainable growth. The AKI expects the life/non-life market split to shift to a 40:60 ratio in the short term, and hopes to eventually see the long-term segment expand to comprise 80% of GWPs, in line with developed European and North American markets.

Recent financial reforms have created a bright outlook for the segment in the long term; providers are increasingly benefitting from the central bank’s introduction of bancassurance policies in 2013, codifying the ways in which underwriters can partner with financial institutions in insurance provision. CIC, Britam, Kenya Orient Insurance and CfC Life already have agreements with various institutions, and Jubilee moved in December 2013 to partner with the National Bank of Kenya to offer life insurance products. In an effort to encourage Kenyans to take up insurance, the government has also offered tax rebates of up to 15% on most life, health and education insurance products.


Kenya’s rapidly expanding economy has provided a host of new opportunities for insurance providers. Perhaps the most significant of these lies in project insurance, which is expected to gain prominence in the coming years, as Kenya prepares to roll out a host of mega-projects aimed at improving power supply, infrastructure and, eventually, commercial oil production. Indeed, with billions of dollars of new projects currently in the pipeline, both insurers and reinsurers are poised to benefit from nationwide construction projects, from the standard-gauge railway (SGR) project extending from Mombasa to Nairobi and deeper into the EAC, to the Lamu-Southern Sudan-Ethiopia Transport Corridor (LAPSSET) and Lamu Port projects (see Transport chapter).

Within the oil sector, the exploration process offers unique general liability concerns that can attract higher-than-average premiums and claims. Extremely heavy and bulky drilling rigs and equipment will need to be transported to remote locations, many times using inadequate highways and bridges, which increases both risk of carriage and public liability risks.

“Companies are already benefitting from these [ mega-projects], particularly in insuring some of the oil exploration equipment. The moment oil is commercially exploited, it is going to present insurable property risks, transportation risks, and refinery and storage risks. All of those will be major sources of premiums for insurers,” Tom Gichuhi, CEO of the AKI, told OBG.

Regional Expansion

Despite the challenges facing insurance companies, Kenya’s market is one of the most mature and well developed in Africa, and local players have increasingly moved to expand both domestically and within the EAC. Kenya’s devolution into 47 more autonomous counties offers companies better access to outlying markets that now have greater decision-making powers, leading to the expectation that regional and rural markets will pick up over the medium term. At the same time, the strength and profitability of Kenya’s domestic market has led its best-performing companies to expand outside of the country. Firms including Britam, Takaful Insurance of Kenya and Resolution Insurance announced plans for regional expansion in 2013, and in March 2014 CIC announced plans to invest KSh1.2bn ($13.68m) to open subsidiaries in South Sudan, Uganda and Malawi between May and July 2014.