(Nairobi) – Kenya’s Insurance Regulatory Authority (IRA) has initiated steps to review underwriting laws to reduce the statutory claims payment period and improve the management of insurers, aiming to rebuild trust in the insurance industry.
The IRA is seeking a consultant to lead the overhaul of the current legal framework. The proposed changes will be incorporated into an Insurance Bill and supporting regulations, which will be presented to Parliament for approval. This move comes as Kenya’s insurance penetration stagnates at less than three percent, with Nairobi County generating over 80 percent of premiums. Challenges such as fraud, price undercutting, and delays in claims settlement have plagued the sector.
The regulator emphasizes the need for reforms to adapt to changing market dynamics, rising consumer expectations, and technological advancements. The planned review aligns with the Treasury’s Draft National Insurance Policy, first developed in 2021, which proposes reducing the statutory claims payment period from 90 days to 30 days. This change aims to address over 70 percent of complaints from insurance service consumers.
Data from the IRA shows that complaints against insurers have risen for three consecutive years, with 1,878 grievances filed in 2022, up from 1,686 in 2021 and 1,637 in 2020. Delayed claims settlements accounted for 63.3 percent of these complaints.
Reducing claims processing time is just one part of the broader reforms. The legal review also seeks to ensure policyholders are treated fairly, expand access to affordable insurance products, and address industry-wide challenges such as fraud and price undercutting. It will examine key areas, including licensing, compliance, enforcement, surveillance, market conduct, professional ethics, and dispute resolution. The IRA hopes these changes will boost public confidence in insurance products.
Emerging risks like cybersecurity threats and climate change will also be considered. The review will explore ways to stimulate appetite for insuring such risks, which have become increasingly costly due to global loss ratios.
Kenya’s insurance penetration rate currently stands at 2.34 percent, lagging behind other markets such as South Africa (14.3 percent) and the global average (6.7 percent). According to current law, insurers have 90 days to process and pay claims after admitting liability. Extensions of 30 days can be requested, but failure to meet deadlines results in penalties of five percent on the unpaid amount. However, enforcement of these rules has proven challenging, with the Competition Authority of Kenya and courts intervening in some cases to compel insurers to honor claims.