Executive summary

In October 2025, the Insurance Regulatory Authority (IRA) published 13 draft regulations aimed at strengthening supervision, improving governance and promoting fair insurance practices. These proposals cover critical areas such as market conduct, corporate governance, claims management, Takaful operations, licensing of intermediaries and service providers and oversight of auditors and actuaries. Once enacted, the new provisions would significantly reshape Kenya's insurance regulatory landscape, introducing new compliance obligations for insurers, intermediaries and service providers.

Detailed discussion

Each set of draft regulations is highlighted below.

Draft Insurance (Market Conduct) Guidelines 2025: These guidelines would introduce comprehensive measures to strengthen customer protection throughout the insurance product lifecycle, creating significant operational and compliance obligations for insurers and intermediaries. They would require licensees to assess customer needs before offering advice or concluding a contract, ensuring that the recommended product is suitable for the client. Communications must be clear, accurate and free from misleading information, and policy documents must be issued within 14 days of cover inception. To reinforce compliance, the guidelines would grant the IRA strong enforcement powers, including the ability to direct remedial action, impose monetary penalties and revoke a license for noncompliance.

Draft Insurance (Risk Management and Control Functions) Guidelines 2025: These guidelines would require insurers to establish four independent and adequately resourced control functions: risk management, compliance, actuarial and internal audit. In addition, insurers must implement a formal Enterprise Risk Management (ERM) framework that comprehensively addresses material risks, including strategic, insurance, operational, financial crime such as money laundering and the emerging area of conduct-of-business risk. This framework is designed to strengthen governance and ensure proactive identification and mitigation of risks across all aspects of the organization.

Draft Insurance (Corporate Governance) Guidelines 2025: The draft amendments would introduce stricter qualification criteria for independent directors. Specifically, they would require that an independent director hold less than a 5% share in the licensee, its parent company or any subsidiary. In addition, the guidelines would prohibit cross-directorships and any significant personal or professional ties with other directors, reinforcing independence and objectivity in governance.

Draft Insurance (Claims Management) Guidelines 2025: These guidelines would introduce a structured framework to standardize claims handling and strengthen consumer protection in response to rising claim rejections and complaints. They would impose strict timelines, requiring insurers to acknowledge claims within two working days and issue a final decision or settlement offer within seven days of receiving the investigation report. Importantly, the guidelines would limit insurers' discretion to reject claims by prohibiting refusals based on reasons such as late reporting or nondisclosure of facts that the policyholder could not reasonably have known.

Draft Insurance (Reinsurance Arrangements) Guidelines 2025: These guidelines would introduce strict regulatory oversight for reinsurance placed outside the local market. Insurers would be required to obtain prior approval from the Commissioner before ceding any risk to foreign reinsurers. This measure aims to enhance transparency and ensure that offshore placements comply with regulatory standards.

Draft Insurance (Intermediaries) Regulations 2025: These regulations would introduce stringent controls over insurance distribution by prohibiting any person from acting as an intermediary without first obtaining a valid license from the IRA. Notably, the regulations expressly exclude bank assurance and microinsurance intermediaries from their scope, ensuring that these channels remain governed under separate frameworks.

Draft Insurance (Index Insurance) Regulations 2025: These regulations would establish the regulatory structure and define the IRA approval process for index insurance products, specifying minimum required features and limits on claim payout times.

Draft Insurance (Operation of Takaful) Regulations 2025: These regulations would propose mandatory operational requirements, including the complete segregation of participants' assets from the shareholders' assets and the creation of a distinct Participants' Risk Fund and Investment Fund (for family Takaful). Financially, the regulations would strictly mandate that all operating and management expenses be borne exclusively by the shareholders' fund.

Draft Insurance (Products) Regulations 2024: These regulations aim to introduce a mandatory and comprehensive framework for the development, approval and sale of all insurance products, whether new or repackaged. The framework seeks to prohibit the sale of any insurance product without the Commissioner's prior approval. The rigorous application for approval would demand documentation such as the policy wording, claim form, key features statement and an actuarial premium pricing structure.

Draft Insurance (External Auditors and Appointed Actuaries) Regulations 2025: These regulations would set stringent standards of integrity and competence for individuals appointed to these critical oversight roles. They would introduce rigorous suitability criteria, disqualifying any person who has been convicted of financial fraud, received a warning or reprimand from the IRA or served as a director of a financial institution that became insolvent due to financial mismanagement. This framework aims to safeguard accountability and strengthen confidence in the governance of insurance entities.

Draft Insurance (Service Providers) Regulations: The proposed regulations would introduce a mandatory licensing framework for service provider firms. Under this regime, all key individuals such as directors and shareholders would be required to undergo a comprehensive "Fit and Proper" assessment to evaluate their integrity and financial soundness. In addition, the regulations seek to elevate professional standards by mandating that individuals hold a valid certificate of professional qualification and maintain adequate professional indemnity cover. These measures aim to strengthen accountability and ensure that service providers operate with the highest levels of competence and integrity.

Draft Bancassurance (Amendment) Regulations: The proposed amendment would introduce changes to the wording throughout the principal regulations. Notably, the term "registration" would be replaced with "licensing" in reference to bank assurance intermediaries and the entire application process. In addition, the amendment seeks to increase the mandatory licensing fee significantly — from 20,000 Kenyan shillings (KES20k) to KES100k.

Insurance (Amendment) Regulations: These amendments aim to modernize the regulatory framework by consistently replacing the term "registration" with "licensing" across all processes for insurers, intermediaries and service providers. The draft regulations also introduce a revised schedule of licensing fees and expand the scope of insurance business by adding specific provisions for the classes and subclasses of microinsurance.

Next steps

The IRA is still reviewing stakeholder submissions, but it would be prudent for organizations to begin preparing early for potential changes. Early readiness could help bolster compliance and avoid operational disruptions should the proposals be enacted.

Actions to consider include the following:

• Conduct a preliminary regulatory impact review: Assess the draft provisions against existing frameworks to identify areas that may require adjustment, focusing on governance, risk management, licensing and product development.
• Develop contingency plans: Prepare flexible strategies that can be implemented quickly if the regulations are adopted, including updates to internal policies, control functions and compliance protocols.
• Budget for possible licensing fee adjustments: Factor in the proposed increase in licensing fees for intermediaries, service providers and bank assurance operations as part of financial planning.
• Evaluate professional standards: Review the qualifications and indemnity coverage of directors, key individuals and service providers to ensure readiness for stricter requirements.
• Strengthen compliance infrastructure: Enhance monitoring and reporting systems to demonstrate adherence to evolving regulatory expectations, noting the potential for expanded enforcement powers.
• Engage legal and compliance advisors: Work with advisors to interpret the draft provisions and develop a roadmap that can be activated promptly if the regulations are finalized.