Kenya Tightens Insurance Rules as Kenya Re Gets Bigger Share of Business

Kenya's insurance regulator is giving local reinsurers a bigger role as insurers prepare contracts for 2027.

The Insurance Regulatory Authority (IRA) has tightened rules governing how Kenyan insurers transfer risk to overseas reinsurers, requiring companies to first exhaust available local capacity.

The regulator has also confirmed a mandatory 25 per cent reinsurance cession to Kenya Reinsurance Corporation, up from 20 per cent, for general business.

The changes come as insurers prepare their reinsurance programmes for 2027. The IRA says final reinsurance cover notes must be filed for approval by October 31, 2026.

The new rules change where insurers place risk

Reinsurance is insurance bought by an insurance company to protect itself against very large or unexpected losses. It allows an insurer to spread risk instead of carrying the full cost of a major claim alone.

Under the new direction, insurers are expected to arrange reinsurance with local reinsurers before seeking approval to place Kenyan risks with foreign firms.

The IRA says every insurer must reinsure with Kenya Re a quarter of each of its reinsurance treaties relating to general business. The regulator is also scrutinising the quality and regulatory status of reinsurers used by local companies.

Insurers have been told to avoid placing more than 50 per cent of a risk with a single reinsurer unless they can justify the decision.

Insurers face a January deadline

The changes matter because failure to comply could affect an insurer's ability to write new business.

The IRA says companies whose reinsurance arrangements have not been approved by January 1, 2027 will not be allowed to write new business. Insurers are therefore under pressure to complete negotiations and submit their cover notes before the October 31 deadline.

The regulator is also asking companies submitting their 2027 arrangements to show that reinsurance balances due up to the second quarter of 2026 have been settled, or that an agreed payment plan is in place.

Actuarial certification will also be required to demonstrate that the reinsurance arrangements provide adequate protection and have clear contractual terms.

Why this matters to the insurance market

The immediate effect is greater demand for local reinsurance capacity. Kenya Re is listed on the Nairobi Securities Exchange and is 60 per cent government-owned, according to Business Daily's report on the regulator's directive.

Other reinsurers operating in the Kenyan market include Continental Reinsurance, East Africa Reinsurance, Ghana Reinsurance, WAICA Reinsurance Kenya and ZEP-RE.

For insurers, the rules could change how they structure their risk protection and where they place business. For reinsurers, the changes could increase the amount of Kenyan business available locally.

For customers, the effect is less direct. Reinsurance sits behind the policies sold by insurers, but the strength and cost of reinsurance can influence how insurers manage risk and price products.

Mwenendo has previously reported on Kenya Re's regional expansion and recruitment as the company builds capacity across East Africa. Kenya Re's regional expansion provides context for the regulator's push to strengthen local reinsurance capacity.

The next step for insurers

Insurers now have until October 31 to file their final 2027 reinsurance cover notes with the IRA.

The regulator will also continue checking the financial strength and regulatory status of reinsurers, the structure of treaties and the adequacy of insurers' retained risks.

The bigger question for the market is whether local reinsurers have enough capacity to absorb the additional business while insurers continue to obtain the protection they need for large and complex risks.