Motor Insurance Payouts Hit Record Sh44.8 Billion as Claims Surge

Motor insurers in Kenya paid out a record Sh44.83 billion in the year to December, marking a sharp 37.1 percent increase as accident, repair and theft-related claims surged. Data shows that own damage claims rose to Sh15.97 billion, while accidental damage payouts more than doubled to Sh8.65 billion.

Personal injury claims also climbed significantly, rising 55.7 percent to Sh8.08 billion and fatality payouts increased by 52.9 percent to Sh2.85 billion, following a rise in qualifying deaths to 3,598.

Despite the ballooning claims, premiums grew marginally by just 1.6 percent to Sh55.98 billion, leaving insurers exposed to mounting underwriting losses. Losses deepened in both the private motor segment (Sh3.06 billion) and the commercial motor segment (Sh3.04 billion).

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Interestingly, standalone vehicle theft claims fell by 52 percent to Sh700.4 million, in line with a decline in reported theft cases. However, accidental damage cases surged 2.4 times to 47,792, driving overall costs higher.

With payouts escalating and fraud remaining a persistent challenge, insurers are now repricing risk and tightening underwriting rules. This includes raising premiums, declining cover for older or high-risk vehicles, and deploying telematics to link pricing to mileage and driving behavior.

Courts have recently affirmed the principle of market pricing freedom, lifting injunctions that had restricted insurers from charging higher rates for older vehicles. Earlier attempts to impose minimum premiums, however, were struck down.

As a result, analysts warn that motorists should brace for further increases in premiums and stricter policy terms, particularly as the cost of spare parts rises and road usage continues to expand.