Trends Shaping Kenya’s Insurance Industry

Executive Summary

Kenya’s insurance industry is undergoing significant transformation driven by regulatory reforms, technological evolution, and increased scrutiny of claims management practices. Despite efforts to enhance efficiency and consumer trust, challenges such as fraud, outdated systems, and slow adoption of artificial intelligence (AI) continue to hinder progress. Recent proposals by the National Treasury and the Insurance Regulatory Authority (IRA) aim to strengthen transparency, protect consumers, and rebuild confidence in the sector. This report examines four key developments — new rules on claims handling, auditor rotation, deployment of AI, and insurance fraud — and analyzes their impact on decision-making for insurance brokers.

Introduction and Background

Kenya’s insurance industry is at a regulatory, fight against fraud and technological turning point. New IRA guidelines aim to restore fairness and transparency, auditor reforms strengthen governance, AI holds untapped potential for efficiency, and intensified fraud controls seek to safeguard industry integrity.
For insurance brokers, these shifts demand adaptive strategies, digital competence, and enhanced accountability. Those who evolve alongside these reforms will not only navigate regulatory complexity but also play a pivotal role in rebuilding public confidence in insurance as a dependable financial safeguard.

IRA’s Proposed Rules to Curb Unfair Claim Rejections

The Insurance (Claims Management) Guidelines, 2025, proposed by the Treasury through the IRA, mark a major shift toward customer protection and accountability. These guidelines aim to eliminate arbitrary claim denials, enforce processing timelines, and promote transparency in insurer–client relations.

Key provisions include:

1. Fair Claim Handling:
   Insurers are prohibited from rejecting claims on unreasonable or unfair grounds.
   • Non-disclosure of information the policyholder couldn’t reasonably know.
   • Undiagnosed pre-existing medical conditions.
   • Honest or non-negligent misrepresentation.
   • Breach of terms unrelated to the loss.
   • Late reporting without assessing valid reasons.
   • Policy breaches where documents were not provided at inception.
   • Non-payment of premiums if cancellation wasn’t properly communicated.
   • Expired driving license if the driver was not disqualified.
   • Unpaid premiums where policies were not cancelled
2. Claims Procedure Manual:
   • Insurers must maintain a claims handling manual covering all steps from claim notification to settlement.
   • The manual should specify timeframes for each stage in line with the Insurance Act provisions.
   • A claims handling manual must be developed for all classes of business, defining timelines, procedures, and internal controls.
3. Insurers are now required to acknowledge claims within two working days and make final decisions within seven days after investigations.

Unacceptable Grounds for Rejection Include:

For insurance brokers, these guidelines reinforce their advisory and intermediary roles. Brokers will need to:

• Educate clients about new rights and timelines under the proposed regulations.
• Monitor insurer compliance to ensure fair treatment of policyholders.
• Document all interactions to safeguard against disputes.
• Adjust their internal claims support systems to align with the new procedural standards.

Insurance brokers, as intermediaries between clients and underwriters, will face:

• Increased accountability to ensure timely submission and follow-up of claims.
• Closer scrutiny of the advice given to clients regarding coverage and policy terms.
• Enhanced customer trust, as brokers will operate under a more transparent claims regime.
• Need to digitize claims tracking systems to align with new reporting and documentation timelines.

This regulatory shift aims to standardize claims handling, curb delays, and prevent unfair denials, restoring trust in the industry. While they boost consumer confidence through transparency and fairness, they also increase compliance demands on brokers, requiring more timely and accountable engagement with clients and insurers.

New Rules to Cap External Auditors’ Tenure

The Insurance (External Auditors and Appointed Actuaries) Regulations, 2025 seek to strengthen financial governance and accountability in insurers’ reporting. Audit partners, managers, and staff will be capped at four consecutive years, while audit firms will be limited to eight years, followed by a mandatory three-year cooling-off period before reappointment.

Objective: The reforms aim to enhance financial transparency, ensure “fresh perspectives” in oversight, and safeguard policyholder funds by preventing prolonged auditor–client relationships that could compromise independence. 

Impact on Brokers:

• Strengthens oversight and transparency in insurers’ financial reporting.
• Builds investor and policyholder confidence through reduced fraud and manipulation risks.
• Enhances brokers’ trust in insurer financial stability.
• Helps brokers make better-informed product recommendations and policy placements.
• Promotes stricter due diligence and risk assessment when evaluating insurers.
• Creates a more accountable, transparent market environment.
• Requires brokers to stay alert to audit changes that could signal insurer instability.

Treasury’s Push to End Insurance Payout Denials

The Treasury’s move to tighten claim processing tackles a key industry pain point—delayed or denied settlements. IRA data shows over 53% of consumer complaints in 2023 were linked to delayed claims, while 18.9% involved outright denials.

The proposed guidelines:

• Require fair, documented reasoning for all claim decisions.
• Mandate clear policy communication to prevent rejection on unissued or misunderstood terms.
• Standardize motor vehicle valuations to eliminate disputes over compensation amounts.

These changes will reshape how brokers manage client relationships:

• Brokers will need to proactively track claim timelines to ensure compliance.
• The emphasis on transparency provides brokers an opportunity to differentiate through service quality, acting as advocates for fair treatment.
• However, brokers must also adjust expectations, as insurers may tighten underwriting standards or pricing to manage new compliance costs.

In the long run, consistent and fair claim processing will likely improve market reputation, helping brokers attract and retain clients more effectively.

Deployment of AI in Claims Management

While AI has revolutionized claims automation, fraud detection, and customer service globally, its deployment in Africa particularly sub-Saharan markets remains low. Key barriers include: Outdated infrastructure and fragmented paper-based data storage, Regulatory uncertainty around data privacy and AI governance, Cultural and workforce resistance due to fears of job loss, High implementation costs and limited local InsureTech expertise.

Even where mobile penetration is high, poor internet connectivity and weak cloud adoption hinder real-time data processing, a core requirement for AI-driven claims systems.
AI offers long-term potential to enhance efficiency, but for brokers:

• The current lack of AI integration means manual claim tracking and human mediation remain vital.
• Brokers may need to invest in digital tools and training to stay competitive as insurers modernize.
• Once AI adoption grows, brokers could use predictive analytics to personalize policy recommendations and anticipate client needs.
• However, brokers must remain cautious about data privacy obligations and potential liability when interacting with AI-driven systems.

Ultimately, AI adoption will shift brokers’ roles from intermediaries to data-informed advisors, but this evolution depends on broader sector modernization.

Escalating Insurance Fraud and Technological Countermeasures

Kenya’s insurance sector faces a surge in fraudulent claims, with over 22,000 claims worth Sh658.9 million rejected in Q1 2025 alone. Fraud spans exaggerated accidents, fake medical reports, and collusion between clients and insiders. The Insurance Fraud Investigative Unit (IFIU) continues to uncover widespread schemes especially in motor and medical insurance.

Leading insurers are now turning to AI, biometric verification, and digital data sharing to curb fraud. Experts argue that technology-driven verification can significantly reduce financial losses and rebuild trust in both public and private insurance schemes.
Fraud directly affects brokers’ credibility and commission earnings. Therefore:

• Brokers must implement stronger verification processes during onboarding and claim initiation.
• Digital literacy becomes essential, as brokers collaborate with insurers using fraud analytics tools.
• Brokers who align with tech-driven, transparent insurers will gain competitive advantage.
• Conversely, those associated with fraudulent claims risk reputational damage and regulatory penalties.

By embracing technology and supporting ethical practices, brokers can position themselves as trust enablers in a sector struggling with credibility challenges.

Strategic Implications for Insurance Brokers

The convergence of new regulations, technological disruption, and heightened fraud risks presents both challenges and opportunities for brokers:

In this evolving environment, brokers’ decision-making will increasingly hinge on balancing compliance, efficiency, and customer trust.