The devastating effects of the Coronavirus have taught us many things. This pandemic has highlighted government and healthcare inadequacies. It has also put a harsh light on the inequalities inherent in many different social systems. And yet, more positively, it has illustrated our interconnectedness. 

In a globalised world, we are all linked. Through trade routes and tourism or the diasporic movements of this planet’s peoples, we have all felt the effects of this virus. But this article is not about the Coronavirus. It is about understanding the value of educating yourself on factors that will influence your business’ operation. 

The insurance industry in Kenya is vitally important and becoming even more so. It is also very much linked to the general state of the Kenyan economy. 

As enterprise develops, so too does the value of insuring businesses from theft, ruin and disaster. If the insurance industry develops it will benefit the economy, boost employment, give confidence to entrepreneurs and may even change the structure of society. 

Next week’s article will look to analyse the potential future of Kenyan insurance. That will include its threats, opportunities and the potential effect of the Coronavirus. For now, it is important to know that general economic progress results in the growth of the insurance industry and, to a varied degree, the converse is also true. 

A businessperson can never be too prepared or too knowledgeable about the changing dynamics of their business environment. To help ensure that our readership understands what is happening in the world of insurance, we have compiled this list of the four things each of us should know. 


It is well-developed and better regulated than many others in Africa

In 2016, the insurance industry in Kenya was ranked as one of the most mature of all African insurance industries. It has been around longer than many and has had the chance to grow and develop overtime. 

As a result, it is well-regulated. This is according to the astute observations of the Oxford business group. These regulations have been revised and amended several times over the last twenty or so years, changing as befits a maturing market. 

Kenya’s Insurance Act. 487 which originally came into force in 1984, now stipulates regulations with regards to a great number of limits insurers must adhere to. 

For example, the Insurance Regulatory Authority (IRA) has stipulations on a minimum capital requirement for insurance firms as well as regulations on ownership. At least a third of ownership must be East African and no person is allowed to own over 25% of the company unless under exceptional circumstances. 

But it is a tough industry to enter

The Oxford business group, who have conducted various studies on the state of the Kenyan insurance industry, suggest that though there are large profits to be made in insurance, it is a very competitive market. 

Middle- to higher-income brackets are chased by most of the market. This makes it very competitive as there are only so many middle- to high-income earners and enterprises to chase. 

Rationalisation of the industry is ongoing 

Over the last couple of years Kenya’s insurance industry has been undergoing a process of rationalisation. That means that, through the process of consolidations, mergers and acquisitions, the market is becoming increasingly dominated by fewer larger firms. 

The IRA has a number of objectives with regards to keeping and maintaining the market as a whole. Often these objectives come into conflict with one another. As per the IRA’s 2013-18 strategic plan, the regulatory body hoped to promote inclusivity, competition and stability in the market. 

Rationalisation is often seen to make markets more stable but it also makes them less competitive. This is the direction in which Kenyan insurance is heading. 

There is huge scope for growth

As a result of the Kenyan market’s maturity with respect to its East African neighbours, there is great potential for growth into those other countries. Indeed, Kenyan insurance firms are already present, through subsidiaries or affiliated operations, in Uganda, Tanzania and Sudan.

Regulators from the IRA know that there is great potential for the industry to grow domestically. As we have highlighted above, many of the market’s established firms chase the higher and middle-income enterprises. 

Middle income personal insurance is growing as Kenya’s middle class also grows. But lower-income individuals and enterprises are still not a focus for many insurance vendors. The insurance industry looks set to grow if they can reach this audience and widen access to it. 

Kenyan industry, our famed jua kali craftsmen for one, are largely uninsured. They belong to an informal sector of enterprise and seldom follow more formal routes of business operation. However, if they can be accessed and encouraged to buy insurance this will be a potential for huge growth in the insurance industry. Farmers and small businesspeople generate a large and largely untapped portion of Kenya’s economic activity. 


It is our hope that this information better informs Kenya’s business community. Stay tuned for next week’s article on the potential future that Kenya and its insurance industry could share. 


If you found this article interesting and you are interested in the state of Kenyan enterprise then feel free to read some of our other articles on Kenyan and African economic development. 

Follow this link for an article on how ‘stakeholder capitalism’ and climate change may affect our economy

And follow this link for more information on how sub-Saharan Africa’s young population may alter the course of its economic development.