Life and medical cover drive Kenya’s insurance penetration to 10-year high

A 16.5% surge in gross premiums pushes market size to KSh466.6bn, but margin pressures and geographic concentration remain persistent hurdles.

By Our Reporter

Kenya’s insurance industry recorded its strongest top-line expansion in a decade, pushing national insurance penetration to 2.63% of gross domestic product as total direct written premiums surged past KSh466bn.

According to figures released by the Insurance Regulatory Authority (IRA), gross direct insurance premiums rose 16.5% to KSh466.58bn ($3.61bn), up from KSh400.59bn in the previous year. The performance represents the highest penetration level since 2016, up from 2.45% in 2024, driven by double-digit growth across both long-term life cover and private medical insurance.

“The performance shows the resilience and expanding contribution of the insurance sector to the protection of Kenyan households, businesses and the wider economy,” said the IRA in its annual performance report.

Average per capita spending on insurance also moved upward. Insurance density grew to KSh8,675 ($67.20), compared with KSh7,573 previously, signaling increased cash deployment into risk cover despite broader pressures on household budgets.

Long-term life savings and health policies lead growth

Long-term life assurance recorded the fastest growth among the industry’s mainstream categories, expanding 23.2% to KSh236.29bn. Within the life segment, long-term coverage reached a penetration rate of 1.34% of GDP, outpacing short-term general business.

“Long-term insurance business recorded sustained growth driven by increased demand for life assurance, deposit administration, and pension products,” the regulator stated, adding that “the long-term business sector demonstrated strong capital accumulation during the reporting period.”

The life fund carried forward, representing assets reserved specifically to meet long-term obligations to policyholders, grew 22.9% to KSh990.27bn, putting the industry’s long-term capital pool within striking distance of the KSh1tn benchmark.

Underpinning the expansion in life business was a sharp appetite for retirement planning and capital accumulation. Deposit administration products generated KSh81.22bn, while personal pension plans expanded to KSh24.54bn.

General insurance premiums rose 9.37% to KSh224.24bn, corresponding to a general insurance penetration rate of 1.28%. Medical insurance maintained its dominance as the single largest and fastest-growing sub-class within general insurance, climbing 22.3% to KSh93.20bn.

“Medical insurance remained the largest class and was among the fastest growing, with premiums increasing 22.30% to KSh93.20 billion,” the regulator noted, pointing out that health coverage continues to form the core of commercial general insurance lines.

Motor insurance generated a combined KSh62.60bn in premiums, divided between private motor policies at KSh32.82bn and commercial motor cover at KSh29.78bn.

Microinsurance recorded the sharpest relative acceleration across the entire market, with gross written premiums rising nearly tenfold to KSh2.17bn from KSh234.23m in the previous period.

“The sharp increase signals growing efforts to extend affordable insurance protection to previously underserved segments of the population,” said the IRA.

Capital base expands, but profit margins moderate

Balance sheets across the market broadened alongside the growth in premiums. Total industry assets expanded 20.45% to KSh1.51tn, underpinned by an 18.87% increase in investment assets to KSh1.31tn. Shareholders’ funds grew 11.01% to KSh257.60bn.

“The insurance industry’s financial position remained strong, with total assets increasing 20.45% to KSh1.51 trillion,” the regulator stated. “The sector continues to maintain adequate capital buffers to support expanding operational liabilities.”

Direct underwriters reported an aggregate net profit of KSh22.37bn ($172.8m), while professional reinsurers generated KSh5.28bn. However, top-line gains were partially offset by operational cost pressures and escalating payout requirements.

“Profitability moderated from the previous year amid higher finance and service expenses,” the regulator noted, observing that operational overheads weighted heavily on net technical results.

Claims and benefit payments increased across all main lines. Payouts under long-term business rose 15.69% to KSh122.81bn, while net settled claims across general and microinsurance lines rose 14.31% to KSh104.47bn. The regulator highlighted that “claims inflation, particularly within medical and motor insurance classes, continued to exert upward pressure on total underwriting expenses.”

Regional concentration and structural divides remain

The industry’s gains remain heavily geographically concentrated. Nairobi accounted for 81.1% of total written premiums, followed by Mombasa at 3.3%, Kiambu at 2.7% and Nakuru at 1.8%.

“Nairobi County continued to account for the lion’s share of premium income, reflecting the centralization of major corporate headquarters and financial institutions,” the IRA reported, noting that the remaining 43 counties collectively generated less than 12% of national premiums.

Furthermore, the climb to 2.63% penetration highlights the structural ceiling facing voluntary retail cover in Kenya. Much of the headline premium growth reflects the repricing of medical policies to match clinical cost inflation and mandatory commercial requirements, rather than organic mass-market adoption.

While microinsurance models are starting to capture lower-income segments, formal insurance remains a discretionary line for most households struggling with high living costs and limited disposable income. Bridging the gap between corporate balance-sheet expansion and mass retail accessibility remains the sector’s central challenge.