Demands from reinsurers in Kenya for more information about flood-related risks and the need for insurers to seek permission to write certain risks has caused a furore among insurers locally.
However, David Mitoko, group head, technical operations at Continental Reinsurance, said it was a necessary response to claims from floods earlier this year and the potential impact of a super El Niño forecast for later this year.
He said the changes, which include notifications of all risks located within 10 metres of any form of water source, were agreed by the local association of reinsurers in July and would take effect for any renewal business from September 1 onwards.
Discussing the changes at a round table organised by Continental Re and Africa Ahead, a group of market experts agreed claims this year were likely to be higher than average, not just in quantity but in quantum.
Super El Niño warning
The country was hit by heavy rains in March, leading to the deaths of at least 25 people. Nairobi was one of the worst-affected areas and is in the firing line for the feared super El Niño in the expected October rains.
Only recently the Kenyan government put out a warning for residents and businesses in 18 counties across the country to prepare for potential flooding come the usual October-November rains. This has been backed by warnings from both the African Development Bank issuing an economic warning for the continent and Munich Re also warning of major insurance complications.
Looking back at the year so far, the round table participants agreed that not only was it a bad year to date for insurers but also for everyone, more generally, who had suffered as a result. Beatrice Hiuhu, director, operations at Heritage Insurance, was among those who expressed sympathy about the wider impact.
She added, though, “This was not just about the property damage claims from flooding. For the first time we also saw a lot of motor claims, personal accident claims and also liability claims. One of the biggest changes was the number of third-party liability claims we saw, as well as a heightened number of claims from the horticultural sector.”
Hiuhu said the event was immensely personal for the company as they lost two of their staff members in a car trapped in the flooding.
Surging flood-related claims
Caroline Mambo, regional manager, East Africa, at Reinsurance Solutions, agreed they are seeing claims from across the market and not just on the property book. She said the final figures are not in but they are expecting the numbers to be higher than the 2024 losses, which had also been a bad year for floods, with the market handling some KES5 billion (US$38.7 million) in claims out of overall losses of some KES150 billion (US$1.16 billion).
“This year we have already seen some claims of KES2 billion-KES3 billion (between US$15.5 million and US$23.2 million) already and we know the final figures will go much higher,” said Mambo.
Mitoko agreed that the figures are likely to rise significantly, particularly as he is already aware of at least two claims of more than KES1.5 billion (US$11.6 million) each.
Pointing to the low penetration of insurance, which means many people were unable to make claims, John Njenga, head of reinsurance at ICEA LION General Insurance, said the March floods in Nairobi, but also those across the country, had displaced thousands of people and had hit the informal sector particularly hard.
He blamed poor drainage and poor maintenance for some of the problems and urged authorities to continue their work in clearing drains ahead of the October rains. Boniface Nzinga, managing director of General Adjusters Kenya, agreed that poor maintenance had contributed significantly to the problem.
“But we also had instances where containers had been swept into rivers and then blocked the water, causing water to back up and flood other areas. That resulted in at least one claim of KES1.53 billion (US$11.85 million). In all, we are handling claims of some KES4.8 billion and know of other claims taking the overall total to more than KES6 billion (US$37.2 million), even at this early stage.”
Wilson Airport was a notable problem area with more than 160 millimetres of rain in just one hour, pointing to another issue for insurers because it is almost impossible to prepare the insured for such volumes of water, the insurers agreed.
However, Ouma Samson, underwriting manager at Old Mutual Kenya, said “In 2024 we had 162 claims from those floods. In 2026 we only had six and only one of those was a repeat and most of our claims this year were motor related.”
“The reason we had low numbers of claims this year was that we worked hard with those insureds to help them prevent a repeat and made sure they introduced risk management measures. We chose to do that rather than simply increase excesses.”
Caution on use of excesses
The idea of using rising excesses to encourage risk management and also to reduce costs for insurers was criticised by the group, who feared it would do little more than put insureds off buying cover. This point was made strongly by Nzinga, who said “The more you raise the excess, the more you push the client away. It makes them question the value of insurance altogether.”
The group also discussed some of the broader challenges facing the country, including the steadily rising waters in many of the country’s lakes. It is already making homes and businesses uninhabitable.
Often, the choice has become either to render the property uninsurable or to force the insured to move away entirely. Mitoko said it was these growing risks that had forced the hand of the reinsurance association in issuing its circular to the market back in July.
Climate risks in focus
The conversation turned to the climate and the threats that climate change might bring. Ewan Wheeler, CEO of Acre Africa, said his firm specialises in climate insurance and, as a consequence, had not suffered so many claims directly from the 2026 floods, rather seeing more claims from the recent drought to the north of the country. He pointed to the changing risks that insurers will face as both drought and flood claims impact insureds in the same year as a result of climate change.
He also stressed “We are actually happy to see claims. We know that if we have claims, then word will spread about the relevance of insurance and we will attract more insured.”
Pointing to their experience in Zambia, Wheeler said “When there was a drought in Zambia, we had 120,000 policies in force. Now we have a million and we know that is the result of those claims that we paid.”
Wheeler added “We can see that there is climate volatility in play if it is not climate change. While a drought may have been a one-in-seven-year peril, it is now a one-in-three-year risk. For me, what insurers need to do is to price that risk properly and it needs to be diversified across the global markets because the risk is too big for the Kenyan market to bear alone.”
Jacobeth Barno, CEO of APA Microinsurance, agreed but added that insurers also have a golden opportunity to grow the market. To do that, she said, the market needs to be prepared to share anonymised data about the risks each insurer is seeing.
“At the moment we are responsive and we need to become reactive,” she said. “We have to have the data so that we can mitigate risk before it happens. Raising the excess is not a solution, we should be tailoring our solutions and integrating climate data into our underwriting so that we can be prepared and anticipate the real level of risks.”
However, as Mambo summed it up “Our industry has a long way to go. We agree on a lot of our thinking but on the ground, we don’t have a unified front because everyone is fighting for the same piece of cake.”
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