Kenyans who have long struggled with delayed or rejected insurance claims are set to enjoy stronger protections under new regulations introduced by the Insurance Regulatory Authority (IRA).
The updated rules, contained in the Insurance (Policyholder Protection) Regulations 2025, prohibit insurers from declining claims on what the IRA terms as “unreasonable or unfair grounds.” This marks a major shift in the insurance sector.
The move, anchored in the Insurance (Claims Settlement) Guidelines, seeks to restore public confidence in the country’s insurance industry, which has long faced criticism over opaque and inconsistent claims-handling practices.
The rules compel insurers to justify every claim rejection and outline clear internal procedures for handling complaints. Insurers found in breach could face regulatory sanctions.
Under the new framework, insurers are expressly prohibited from declining claims on grounds considered “unreasonable or unfair.” These include cases where a policyholder could not have reasonably known certain material facts, or where pre-existing medical conditions were undiagnosed before the policy began.
The regulations also forbid insurers from repudiating claims based on late reporting without investigating the reasons for the delay. Other banned grounds include breaches of policy conditions that are unrelated to the loss, or where a policyholder was not provided with the policy document at inception.
Significantly, insurers are also barred from rejecting claims for non-payment of premiums if the cover had not been formally cancelled or if the policyholder had not been notified of the termination, a move designed to curb the misuse of intermediaries.
Another key provision prevents insurers from denying motor insurance claims on the basis that a driver’s licence had expired at the time of an accident, provided the driver was not disqualified from holding such a licence.
The IRA says these measures are intended to “ensure fairness and equitable treatment of policyholders”, addressing widespread complaints about insurers exploiting technicalities to deny valid claims.
In addition to protecting claimants, the new regulations mandate that every licensed insurer develop a Claims Handling Manual.
This manual must clearly outline procedures for every step of the claims process, from claim intimation to settlement and specify realistic timeframes for each stage. Insurers are also required to take into account the provisions of the Insurance Act when setting these timelines, ensuring compliance and uniformity across the industry.
The IRA believes this procedural clarity will reduce disputes, promote faster settlement of claims, and build trust between insurers and policyholders; a relationship that has often been strained by bureaucracy and opacity.
For years, Kenyan consumers have accused some insurance companies of “hiding behind fine print” to avoid payouts. Common complaints have involved claims denied over missed deadlines, paperwork issues, or minor technical breaches that had no bearing on the insured event.
The new rules aim to close these loopholes and align Kenya’s insurance industry with global best practices, where regulators emphasise consumer protection and fair conduct.
Kenya’s insurance penetration rate, the ratio of premiums to GDP stands at about 2.3%, according to IRA data, significantly below the global average of 7%. Analysts say boosting consumer confidence could help double the rate within the next decade.
The reforms also tie in with Kenya’s broader financial inclusion agenda, which seeks to bring more citizens under formal financial protection. By reducing conflicts and fostering trust, the IRA hopes to make insurance more accessible and attractive to households and small businesses alike.
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