Insurance in Kenya

in Kenya

There are two broad categories of insurance: General or Non-Life Insurance (short-term) and Life Insurance (long-term).

  • General Insurance
  • Life Insurance

General insurance, also referred to as Non-Life insurance, is typically defined as any insurance not determined to be life insurance.

General Insurance

General insurance is short term or annual and can be broadly categorized into two; Personal (for individuals) and commercial (for commercial entities). General insurance in Kenya is categorized into 14 distinct classes:

  1. Aviation Insurance is geared specifically to the operation of aircraft and the risks involved in aviation.
  2. Engineering Insurance offers protection against a variety of risks associated with erection, resting and working machinery, plant or equipment. Examples are contractors all risks, Erection all risks, machinery breakdown, electronic equipment, deterioration of stock etc.
  3. Home (Fire Domestic) Insurance covers your house (building) and belongings (content) against risks including; fire, theft, damage by extreme weather and other losses. The insurance can also be extended to cover domestic workers, occupiers and owners liabilities.
  4. Fire Industrial Insurance provides cover against loss or damage to property caused by fire, lightning and explosion. This insurance covers assets such as buildings, plant and machinery, stock insurance, furniture fixtures and fittings and office equipment.
  5. Public Liability Insurance covers the cost of personal injury or property damage claims by a third party as a result of your business activities. Other types of liability insurance are product or professional liability insurances.
  6. Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport by which the property is transferred, acquired, or held between the points of origin and the final destination.
  7. Motor Private/Commercial Insurance covers loss or damage to the vehicle including legal liability to third parties in respect of death, injury or property damage arising from the use of the motor vehicle.

    Motor private covers vehicles that are used for private/domestic purposes while motor commercial covers vehicles used for business/commercial purposes.

  8. Personal Accident Insurance provides compensation in the event of injuries, disability or death caused solely by, accidental, external and visible events. This insurance can also be taken by a group of people such as employees.

  9. Theft Insurance covers loss or damage caused by the unlawful taking of property. Theft insurance as a classification includes Burglary insurance, money or cash in transit etc.
  10. Work Injury Benefits (WIBA) provides employees with financial compensation when, by accident, they suffer injury, become disabled or die while at work. This is a requirement and is enforced by the Kenyan law
  11. Medical Insurance covers medical expenses of the insured and their dependents. The common covers comprise out-patient and in-patient covers with dental and optical extensions.
  12. Micro Insurance is packaging insurance for specific risks at affordable premium.
  13. Miscellaneous Insurance includes other types of insurance not covered in the above classes such as Agriculture, Golfers, Travel, Bonds, Plate Glass etc.
Life Insurance

Life Insurance

Life insurance is a long-term contract between an individual (policy holder) or organisation and an insurance company.

In the event of death of the insured, life insurance ensures that their loved ones continue to enjoy quality life. There are other events in life that may trigger payment from the life insurance cover including critical illness, terminal illness, temporary or permanent disability; this is dependent on the terms of the contract. Other expenses such as funeral expenses may also be covered.

Life insurance policies can be for protection only, or they can combine both protection and investment. The investment element facilitates long term savings and capital growth.

The main classes of Life insurance are:

  • Ordinary/Individual Life Insurance comprises all individual life policies categorized as either Term Assurance; Whole Life; Endowment; or Investment policies.
  • Group Life Insurance comprises group life insurance schemes mainly organized by employers on behalf of their employees; Group Credit/Group Mortgage Schemes which are loan protection schemes organized by financiers like banks, co-operative societies, microfinance institutions, etc.; and last expense schemes which be stand-alone products or are given as a rider to the group life schemes.
  • Pension/Retirement Plans are mainly offered by insurance companies to help individuals build up a sum of money that can be used in retirement. Pension plans can also be taken by groups such as employers. The money is invested by the insurance company to generate a regular income paid to the retiree and this income is what is referred to as pension.
  • Annuity is another way of planning for retirement. In an annuity, an individual pays a lump sum premium to an insurance company. The insurance company then provides a lifetime income to the individual from their premium.
  • Investment/Unit Linked Contract products give policy holders both insurance and investment under a single integrated plan. The main objective is to facilitate the growth of capital invested by the client/policy holder.
  • Funeral Insurance covers funeral expenses upon demise of the insured or their dependents. It can be purchased as a stand-alone product or as part of another insurance product such as life insurance or medical insurance. It is renewed every 12 months.

Laws and Regulations

The Insurance Industry is regulated by the Insurance Regulatory Authority (IRA) through the Insurance Act and its attendant Guidelines/Regulations. IRA is responsible for licensing, regulating and developing the insurance sector in Kenya.

The Pensions business within the insurance industry is regulated by the Retirement Benefits Authority (RBA) through the Retirement Benefits Act.

AKI works closely with these regulators and other bodies in creating an enabling environment for our members. The industry is governed by three main laws and their attendant regulations: