Kenya agricultural insurance premiums reached approximately KSh2.04 billion in 2025, up from the KSh1.2 billion comparator used in current market reporting.

Insurers and microinsurers also settled agricultural claims worth KSh213.19 million during the year. The insured assets included cattle, poultry, maize, trees, commercial crops, aquaculture and other agricultural businesses.

The increase reflects growing concern about droughts, floods and production losses, alongside stronger links between farm credit and insurance. Banks and agricultural lenders increasingly use insurance to reduce the risk that weather-related losses prevent farmers from repaying loans.

However, premium growth does not automatically prove that agricultural insurance is profitable. Investors must also consider claims incurred, reserves, operating expenses, commissions, reinsurance costs and any public subsidies supporting the products.

Key Overview

• Kenya’s agricultural insurance premiums reached approximately KSh2.04 billion in 2025.
• The current market report uses KSh1.2 billion as the 2024 comparator.
• The IRA’s 2024 annual reporting indicates a slightly higher figure of approximately KSh1.27 billion.
• Insurers and microinsurers settled KSh213.19 million in agricultural claims.
• A simple comparison of settled claims with premiums produces approximately 10.5%.
• The 10.5% figure is not a formal insurance loss ratio or profit margin.
• Demand is being supported by climate risk, agricultural lending and technology.
• Insurance products now cover livestock, crops, trees, poultry and aquaculture.
• Index-based products use rainfall, vegetation or other predetermined triggers.
• Agricultural insurance can help make farms and agricultural projects more attractive to lenders.

Kenya Agricultural Insurance Premiums Reach KSh2.04 Billion

Kenyan farmers and agricultural businesses paid approximately KSh2.04 billion for crop and livestock insurance during 2025 as demand for protection against climate and production risks continued to expand.

The current agricultural insurance market report says premiums increased from a rounded KSh1.2 billion in 2024, indicating growth of approximately 70%.

Insurers and microinsurers settled agricultural claims worth KSh213.19 million during 2025.

The insured assets were no longer limited to conventional maize and cattle farming. Cover extended to poultry, camels, sheep, goats, trees, potatoes, flowers, coffee, aquaculture and high-value commercial agricultural operations.

Premium Growth Needs Accurate Context

The KSh2.04 billion figure relates to insurance business written during 2025, although the latest market report was published on 4 August 2026.

It should not be presented as KSh2.04 billion of new premiums collected during 2026.

There is also a small difference in the 2024 comparison.

Current reporting rounds the earlier figure to KSh1.2 billion, while IRA’s official 2024 annual report indicates agricultural premiums of approximately KSh1.27 billion.

Using the rounded KSh1.2 billion comparator produces growth of 70%. Using KSh1.27 billion produces growth of approximately 61%.

Either calculation still indicates strong expansion, but the source and calculation method should remain clear.

Climate Losses Are Increasing Demand

Droughts, floods and irregular rainfall can destroy crops, reduce pasture, kill livestock and weaken the ability of farmers to repay agricultural loans.

Agricultural insurance transfers part of this financial risk from the farmer to an insurer or wider risk pool.

The latest Kenya insurance uptake analysis links the increase in premiums to more frequent climate-related losses, stronger awareness among commercial farmers and tighter insurance requirements from agricultural lenders.

The report identifies strong activity in both arid counties and major agricultural regions, including Turkana, Marsabit, Mandera, Wajir, Garissa, Isiolo, Nyandarua, Murang’a, Kiambu, Nakuru and Uasin Gishu.

Climate risk affects farmers differently.

A pastoralist may lose livestock when vegetation and water become unavailable during a drought.

A maize farmer may lose a harvest because of inadequate rainfall, flooding or disease.

An aquaculture operator may face losses from low oxygen levels, water pollution, disease or predators.

This variety of risks is encouraging insurers to develop more specialised products.

Insurance Can Make Farms More Bankable

Agricultural lending carries a challenge that does not affect many ordinary business loans.

A farmer may have a viable operation and a good repayment history but still experience a major loss because of weather conditions outside their control.

Where insurance is linked to a loan, part of the production risk is transferred away from both the farmer and the lender.

This can make banks more willing to finance:

• Seeds and fertiliser;
• Livestock purchases;
• Irrigation systems;
• Farm machinery;
• Greenhouses;
• Aquaculture facilities;
• Storage infrastructure; and
• Commercial crop expansion.

The Ministry’s agricultural insurance policy framework recognises insurance as part of the wider effort to protect agricultural producers, stabilise incomes and support additional investment.

The Ministry lists the National Agricultural Insurance Policy 2024 among its current agricultural policies and programmes.

Insurance does not remove the risk that a farm will perform poorly.

Instead, it can reduce the size of the financial loss when an insured event occurs.

This distinction is important for banks, insurers and agricultural investors assessing whether a project can withstand a drought, flood or other production shock.

Embedded Insurance Is Expanding Access

Embedded insurance is included within another financial or agricultural product rather than purchased through a separate insurance transaction.

For example, a crop-insurance premium may be included when a farmer receives:

• An agricultural loan;
• Subsidised fertiliser;
• Seeds or other farm inputs;
• Contract-farming support;
• A livestock-financing package; or
• Access to a digital farming platform.

Embedding the insurance can make enrolment easier and ensure that the farmer, lender and agricultural project are protected from the beginning.

It also reduces some of the distribution expenses insurers would incur when selling policies individually.

However, policyholders still need clear information about the premium, exclusions, payout conditions, claims process and the organisation carrying the insurance risk.

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Traditional and Index Insurance Differ

Traditional agricultural insurance normally pays after the insurer assesses the farmer’s actual loss.

An assessor may visit the farm, confirm the damaged crop or livestock and estimate the amount covered under the policy.

Index-based or parametric insurance works differently.

The payout is linked to a predetermined indicator such as:

• Rainfall levels;
• Temperature;
• Vegetation conditions;
• Drought severity;
• Area yield; or
• Another measurable environmental trigger.

The government explanation of DRIVE operations states that the programme uses index-based livestock insurance as part of a package designed to protect pastoralists from drought-related financial shocks.

If the selected indicator crosses the agreed threshold, a payout can be triggered without inspecting every affected farm.

This can make claims faster and reduce the cost of covering policyholders across large and remote areas.

Index Insurance Carries Basis Risk

Index insurance can still produce outcomes that appear unfair to an individual farmer.

A farmer may experience a genuine loss even though the rainfall, vegetation or yield index does not cross the required payout threshold.

This is known as basis risk.

The opposite can also occur. The index may trigger a payment even where a particular farmer’s actual loss was limited.

The quality of the data, the location of weather stations, the accuracy of satellite measurements and the design of the trigger are therefore central to the product’s credibility.

Investors assessing agricultural-insurance companies should consider whether the technology is reducing operating costs without creating excessive disputes or customer dissatisfaction.

DRIVE Shows the Scale of Public Support

Government and development-partner programmes are helping agricultural insurance reach farmers who might not be able to afford the full premium independently.

Kenya’s DRIVE programme provides drought-risk insurance, savings and other financial services to pastoral communities.

The official Kenya DRIVE programme dashboard currently displays approximately:

• 180,369 insurance policies;
• 649,518 insured livestock units;
• KSh1.97 billion in premium subsidies; and
• KSh642.46 million in insurance payouts.

Current regional reporting separately cites more than 630,000 policies and approximately 3.3 million pastoralists and dependants reached.

These figures should not be treated as directly comparable with the Kenya dashboard because they may cover different countries, periods or programme definitions.

The DRIVE project’s official background information explains that the programme operates across Kenya, Ethiopia, Somalia and Djibouti, while Kenya’s implementation targets pastoral communities and livestock value chains.

Kenya’s agricultural insurance premiums increased from a rounded KSh1.2 billion in 2024 to approximately KSh2.04 billion in 2025, while insurers and microinsurers settled KSh213.19 million in claims. The infographic shows that cover now extends across cattle, maize, poultry, trees, coffee, flowers, aquaculture and other agricultural assets. It explains that climate risk, farm lending, public programmes and satellite-based technology are supporting demand. Traditional indemnity insurance pays after an actual loss is assessed, while index or parametric insurance pays when a predetermined rainfall, vegetation or yield trigger is reached. The graphic also notes that a simple 10.5% settled-claims-to-premium comparison is not a formal loss ratio or measure of insurer profitability.

Claims Comparison Does Not Prove Profitability

Comparing KSh213.19 million in settled claims with KSh2.04 billion in premiums produces a figure of approximately 10.5%.

This may appear to suggest that insurers retained almost 90% of the premiums.

That conclusion would be incorrect.

The KSh213.19 million figure represents claims settled during the year. It may not include:

• Claims incurred but not yet reported;
• Claims reported but not yet settled;
• Future claims relating to current policies;
• Claims reserves;
• Reinsurance costs;
• Agent and broker commissions;
• Technology and administration expenses;
• Marketing and customer-education costs; or
• The cost of developing new insurance products.

The claims and premiums may also relate to different policy periods.

The 10.5% comparison is therefore only a simple comparison of two reported figures. It is not an actuarial loss ratio, combined ratio or insurer profit margin.

Reinsurance Is Central to the Market

Agricultural claims can affect many policyholders at the same time.

A drought covering several counties may trigger thousands of livestock or crop claims within the same period.

This concentration makes reinsurance important.

Reinsurers take on part of the risk accepted by primary insurers, helping protect individual companies from losses that could otherwise overwhelm their balance sheets.

They can also provide data, technical knowledge and product-development support for index-based and climate-related insurance.

However, reinsurance adds another cost to the insurance structure.

The long-term sustainability of the market will depend on whether premiums, subsidies and investment income are sufficient to cover claims, reinsurance, operating costs and the capital insurers must hold.

More Insurers Are Entering the Market

Current reporting identifies APA, CIC, Geminia, Mayfair, Old Mutual, Heritage, Britam, Fidelity, GA and other insurers as participants in agricultural insurance.

Their products cover a wide range of risks.

The CIC agricultural insurance product overview includes crop, livestock and other agricultural protection designed for individual farmers and agricultural businesses.

Other companies have expanded into aquaculture, commercial tree farming, high-value crops and embedded credit-linked insurance.

Greater participation can improve competition, distribution and product design.

It can also make agricultural risk a more meaningful part of the insurance industry rather than a small specialist segment.

However, rapid premium growth should not encourage weak underwriting.

Insurers must still price climate risk accurately, maintain adequate reserves and avoid relying permanently on public subsidies to make every product commercially viable.

Opportunities Extend Beyond Insurers

The growth of agricultural insurance creates potential opportunities for several types of businesses and investors.

These include:

• Insurance and reinsurance companies;
• Banks and agricultural lenders;
• Satellite-data providers;
• Weather-analytics companies;
• Mobile-payment platforms;
• Agricultural input distributors;
• Claims-management technology providers;
• Development-finance institutions; and
• Impact investors supporting food security.

The strongest commercial models may be those that combine insurance with agricultural finance, reliable data and established distribution networks.

Technology can reduce costs, but trust remains essential.

Farmers are unlikely to renew insurance if they do not understand the cover or believe that payouts are delayed, unpredictable or disconnected from their actual losses.

What Investors Should Monitor

Investors should first monitor whether premium growth continues without a sharp increase in claims and operating expenses.

The KSh2.04 billion premium figure shows that the market is expanding, but it does not reveal whether the business is profitable.

They should also monitor:

• Claims incurred rather than only claims settled;
• Formal loss and combined ratios;
• The share of premiums funded by subsidies;
• Reinsurance dependence;
• Farmer renewal rates;
• The cost of customer acquisition;
• Payout speed;
• Basis-risk complaints;
• Technology accuracy; and
• Regulatory changes affecting index products.

The official IRA annual reports directory provides the broader industry data needed to compare premiums, claims and insurer performance over time.

A sustainable agricultural-insurance market must protect farmers while also giving insurers and reinsurers a reasonable return for accepting climate and production risks.

Conclusion

Kenya’s agricultural insurance market is expanding beyond a narrow specialist product.

Premiums reached approximately KSh2.04 billion in 2025 as farmers, lenders, insurers and government programmes responded to rising climate and production risks.

The growth is also broadening the range of insured assets, from conventional crops and livestock to trees, aquaculture and high-value commercial agriculture.

The most important development is the growing connection between agricultural insurance and finance.

Insurance can make farms and agricultural projects more bankable by protecting part of the borrower’s and lender’s exposure to droughts, floods and other production losses.

However, premium growth alone does not prove that the market is profitable or self-sustaining.

Investors must examine claims, reserves, reinsurance, expenses, subsidies, technology performance and customer renewal rates before judging the underlying economics.

FAQs

1. Why is agricultural insurance growing in Kenya?

Agricultural insurance is growing because farmers and lenders face increasing losses from droughts, floods and irregular weather. Banks are also linking some agricultural loans to insurance so that a production loss does not automatically become a loan default. Public programmes, wider insurer participation and satellite-based products are making cover available to more farmers and agricultural businesses.

2. What is index-based agricultural insurance?

Index-based insurance pays when an agreed indicator crosses a predetermined threshold. The indicator may measure rainfall, temperature, vegetation, drought conditions or average crop yields. Unlike traditional insurance, the farmer’s individual loss may not need to be assessed before payment. This can make payouts faster, but it creates basis risk where the farmer experiences a loss without the index reaching the required threshold.

3. Does the 10.5% comparison show insurer profits?

No. Dividing KSh213.19 million in settled claims by KSh2.04 billion in premiums produces approximately 10.5%, but this is not a formal loss ratio or profit margin. It excludes unsettled and future claims, reserves, commissions, administrative expenses, reinsurance costs and other underwriting expenses. The premiums and settled claims may also relate to different policy periods.

4. How does insurance support agricultural lending?

Insurance reduces the risk that a drought, flood or other insured event will leave a farmer unable to repay a loan. This can make lenders more willing to finance seeds, fertiliser, livestock, machinery, irrigation and other agricultural investments. Insurance does not guarantee that the borrower will repay, but it transfers part of the production risk away from the farmer and lender.

Sources: Business Daily agricultural insurance report, IRA official annual reports directory, National Agricultural Insurance Policy 2024, official Kenya DRIVE programme dashboard, DRIVE index-insurance programme explanation, IFC Kenya farmer-insurance analysis,  CIC agricultural insurance products.

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