The Insurance Regulatory Authority (IRA) has revealed that Kenya’s motor insurance business is becoming increasingly difficult to sustain, with insurers recording billions of shillings in losses as rising claims, fraud and soaring vehicle repair costs continue to outpace premium income.
According to the regulator’s latest industry performance report, motor insurance posted an underwriting loss of Sh8.2 billion in 2025, making it the worst-performing insurance class despite another year of strong growth across the wider insurance industry.
The report shows that while insurance companies collected more premiums than a year earlier, the costs of settling claims, paying commissions, and meeting operating expenses continued to rise much faster. As a result, many insurers are relying more heavily on investment income rather than their core insurance business to remain profitable.
IRA Chief Executive Officer Godfrey Kiptum said the industry’s overall performance should not hide the persistent challenges affecting general insurance, particularly motor cover. He noted that the industry’s combined ratio rose to 104.5 per cent, meaning insurers spent more on claims, commissions and operating costs than they earned from underwriting before investment income was considered.
Overall, the general insurance business recorded an underwriting loss of Sh7 billion in 2025, up from Sh5.2 billion the previous year. The regulator’s report also shows that six of the thirteen general insurance classes registered combined ratios above 100 per cent, an indication that they operated at an underwriting loss.
Motor insurance remains one of the biggest insurance products in Kenya because every vehicle on the road is legally required to carry at least third-party insurance. It contributed 27.1 per cent of all general insurance premiums during the year, making it the second-largest segment after medical insurance, which accounted for 41.1 per cent.
Despite its large market share, profitability has continued to decline as insurers battle several costly challenges at the same time. The number and value of accident-related claims have continued to rise, while inflation has pushed up the cost of repairing damaged vehicles. Imported spare parts have become significantly more expensive in recent years due to the weakening of the Kenyan shilling, forcing insurers to pay much higher repair bills than before.
The industry is also struggling with insurance fraud, which remains one of the biggest drains on motor insurers. Cases involving staged accidents, exaggerated repair invoices, inflated injury claims and fake documentation continue to cost companies billions of shillings every year. At the same time, aggressive competition among insurers has kept premiums relatively low as companies compete for customers, leaving little room to absorb rising claims costs.
Even with the underwriting losses, Kenya’s insurance industry still reported a healthy profit after tax of Sh33.07 billion in 2025. Investment earnings rather than insurance operations largely supported that performance. Industry investments grew to Sh1.31 trillion, with about 73.1 per cent invested in government securities, which continue to provide stable returns that cushion losses from business lines such as motor insurance.
Delay in claims settlement
The report also highlights persistent delays in claims settlement. According to the IRA’s April 2026 claims snapshot, liability claims under general insurance take an average of 29.6 months to settle after being admitted, while non-liability claims take about 4.5 months. In comparison, claims under long-term insurance are settled in an average of 1.6 months.
Kiptum said most of the delays are not caused by insurers refusing to pay claims but by incomplete documentation submitted during the claims process. The regulator noted that nearly two-thirds of outstanding liability claims are still waiting for the required documents before payments can be processed. However, admitted claims and court-awarded claims are generally settled within the required timelines once all documentation has been provided.
Industry experts have repeatedly argued that technology could play a bigger role in reversing the losses. Many insurers are investing in digital claims management systems, artificial intelligence and telematics, which monitor driving behaviour and help insurers price risks more accurately. Better data analytics can also help identify suspicious claims much earlier and reduce fraud.
The Association of Kenya Insurers has also continued to advocate for stronger collaboration between insurers, law enforcement agencies, repair garages and regulators to tackle organised insurance fraud, which has become increasingly sophisticated over the years.
Despite the difficulties facing motor insurance, the broader insurance industry continued to expand during 2025. Gross written premiums rose by 17.6 per cent to Sh464.72 billion, while total industry assets grew to Sh1.47 trillion, reflecting continued confidence in the sector.
The report also marked a significant milestone for Kenya’s insurance market. For the first time, long-term insurance overtook general insurance in premium contribution, accounting for 50.7 per cent of total premiums compared with 48.9 per cent for general insurance. The shift reflects growing demand for life insurance, pension products and investment-linked policies, even as motor insurers continue to grapple with mounting losses and increasing pressure on their core business.
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