Kenya’s insurance sector is facing mounting pressure after total claims paid by general insurers exceeded Sh100 billion for the first time, signaling a significant shift in risk dynamics and cost structures. According to data from the Insurance Regulatory Authority, total claims rose to Sh102.77 billion, marking a 13.9 percent increase from Sh90.2 billion recorded in 2024.
The surge has been primarily driven by medical and motor insurance segments, which together accounted for 90.2 percent of total claims. Medical claims alone increased by 17.9 percent, rising from approximately Sh44.64 billion to Sh52.61 billion, and now represent 51.2 percent of all payouts the first time in over a decade that healthcare-related claims have crossed the halfway mark. Motor insurance claims also grew significantly, with accident and theft-related compensation rising by 12.4 percent to Sh40.1 billion.
Within motor insurance, claims for private vehicles reached Sh20.69 billion, while commercial vehicle claims increased by 12.1 percent, from Sh17.31 billion to Sh19.41 billion. This growth reflects a combination of rising road usage, higher repair costs, evolving theft patterns, and persistent fraudulent claims, all of which are increasing the cost burden on insurers.
The rapid escalation in claims has resulted in elevated loss ratios across key segments. Medical insurance recorded a loss ratio of 77.7 percent, while motor commercial and motor private stood at 77.9 percent and 73.6 percent, respectively. These figures indicate that a significant portion of premium income is being absorbed by claims and associated expenses, leaving limited margins to cover operational costs and generate profits. In contrast, other insurance segments maintain loss ratios below 50 percent, highlighting the disproportionate strain within medical and motor lines.
Rising healthcare costs have been a major contributing factor. Increased hospital visits, greater utilization of outpatient and specialized services, and higher pricing of medical procedures have all driven claims upward. Health inflation trends further reinforce this trajectory, with consumer data showing a 2.8 percent annual increase in healthcare costs by December 2025. Specific cost components such as antibiotics rose by 1.8 percent in a single month, while cancer medication prices increased by 2.8 percent in March.
The financial impact on insurers is becoming more evident. Despite premium growth of 22.4 percent, from Sh76.21 billion to Sh93.28 billion, several firms continue to report underwriting losses, particularly in medical insurance. In some cases, insurers are restructuring their portfolios, exiting unprofitable segments, or tightening underwriting standards to manage risk exposure.
These trends are also affecting policyholders. Premiums for motor and medical insurance are trending upward as insurers adjust pricing to reflect higher risk levels. Additionally, some firms are limiting coverage for older or high-risk vehicles, signaling a shift toward stricter risk selection criteria.
Overall, the crossing of the Sh100 billion claims threshold marks a critical point for Kenya’s insurance industry. Sustained increases in medical and motor claims are reshaping pricing models, underwriting practices, and profitability outlooks. The sector’s ability to balance affordability for customers with financial sustainability will be a key determinant of its stability in the coming years.
