Kenya has doubled the maximum compensation payable to policyholders of collapsed insurance companies to about US$3,200 per claim, in a move aimed at strengthening consumer protection and boosting confidence in the insurance sector.
The new compensation limit was confirmed in a government gazette notice dated Jan 9 by the Board of Trustees of the Policyholders Compensation Fund (PCF), in consultation with the Cabinet Secretary for the National Treasury.
Under the decision, the maximum amount payable as compensation on any single claim, across all classes of insurance, has been raised from about US$1,600 to around US$3,200.
“Pursuant to section 179 of the Insurance Act and regulation 12 of the Insurance (Policyholders Compensation Fund) Regulations, 2010, the Board of Trustees of the Policyholders Compensation Fund, in consultation with the Cabinet Secretary, National Treasury, has approved that the maximum amount payable as compensation on any one claim, for all classes of insurance, shall be five hundred thousand Kenya shillings,” the notice said.
The revised limit applies to policyholders and claimants of any insurer that is placed under statutory management or whose licence is cancelled after the notice takes effect, in accordance with the Insurance Act.
More Read
Authorities said the move is intended to provide faster and more meaningful financial relief to individuals and businesses affected by insurer failures, while reinforcing trust in Kenya’s insurance system.
Kenya has in recent years seen several insurers placed under statutory management or forced out of the market, leaving policyholders exposed to delayed or partial claim settlements and prompting calls for stronger safeguards.
The new compensation ceiling applies uniformly across all classes of insurance, creating a standard safety net for policyholders regardless of the type of cover held.
“The compensation limit shall apply to policyholders and claimants of any insurer that is, after the commencement date of this notice, placed under statutory management or whose licence is cancelled,” the gazette notice said.
The announcement comes as Kenyan authorities push ahead with broader regulatory reforms in the insurance sector aimed at strengthening oversight, modernising rules and aligning the industry with international best practices.
Separately, the Insurance Regulatory Authority (IRA) has proposed sharp increases in licensing and annual operating fees for insurers, reinsurers and intermediaries under draft regulations.
Under the proposals, licensing fees for insurance companies would rise to about US$3,200 from roughly US$1,000, while reinsurers would see their licensing fees increase to around US$4,800 from about US$1,600.
Annual renewal fees would also be adjusted to match the new licensing levels, meaning insurers would pay about US$3,200 annually, up from roughly US$1,000, and reinsurers about US$4,800, up from around $1,600.
The draft regulations further propose steep increases in annual fees for intermediaries such as insurance agents, brokers and risk assessors, with some categories facing increases of up to tenfold.
According to the IRA, the proposed changes are designed to strengthen Kenya’s insurance legal framework by addressing evolving market needs, the growing complexity of insurance products and rapid technological change, while improving alignment with international standards.
Micro-insurance companies, which largely serve low-income households, have been exempted from the proposed fee increases, with their licensing and annual fees remaining unchanged at about US$1,000.
Mohamed Sahal, managing trustee of the Policyholders Compensation Fund, said the new compensation limit takes effect from the date of publication and will remain in force until further notice.
Insurance penetration in Kenya remains relatively low compared with global averages, and authorities hope that stronger consumer protection measures and tighter regulation will help deepen uptake and restore confidence in the sector.
