Kenya’s insurance landscape continues to reflect a deeply troubling pattern of inequality, with new data revealing that Nairobi and Kiambu counties maintain commanding leads in insurance uptake while several western and eastern regions lag dramatically behind, leaving millions of households exposed to financial devastation from health emergencies, accidents, and livelihood losses. This persistent disparity raises fundamental questions about financial inclusion, economic development, and the vulnerability of rural populations across the country.
A comprehensive survey conducted by Financial Sector Deepening (FSD) Kenya has brought into sharp focus the wide gaps in insurance coverage across Kenya’s 47 counties, highlighting that millions of households remain without any form of insurance protection beyond the government’s social health coverage scheme. The findings underscore how geography, employment patterns, education levels, and economic opportunities continue to determine whether Kenyan families have access to financial tools that can prevent temporary setbacks from becoming permanent poverty traps.
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Nairobi and Kiambu Set the Pace
The FSD survey reveals that in 2024, 12 percent of residents in both Nairobi and Kiambu counties had at least one insurance policy in their own name, excluding social health coverage. This figure represents the highest insurance penetration rate in the country and stands in stark contrast to the situation in many other regions where insurance remains largely inaccessible or unaffordable for the vast majority of residents.
The 12 percent coverage rate in these two counties, while representing the national peak, still means that 88 percent of residents in even the most economically developed parts of Kenya lack personal insurance coverage. This sobering reality indicates that insurance penetration remains low even in the country’s most prosperous areas, suggesting that broader systemic challenges affect the entire insurance sector beyond just the rural-urban divide.
Nairobi’s position at the top of the insurance uptake rankings aligns with its status as Kenya’s economic powerhouse. According to the Kenya National Bureau of Statistics (KNBS), Nairobi contributes 27.4 percent to the country’s total economic output, a share that dwarfs all other counties and reflects the concentration of financial services, corporate headquarters, government institutions, and high-income employment opportunities in the capital city.
Kiambu’s strong performance in insurance uptake can be attributed to its proximity to Nairobi and its status as a peri-urban county that benefits from spillover effects of the capital’s economic activity. Many Nairobi workers reside in Kiambu, bringing with them formal employment benefits including employer-sponsored insurance coverage. Additionally, Kiambu has developed a strong commercial agriculture sector and a thriving real estate market, both of which contribute to higher incomes and greater capacity to afford insurance products.
The Top Tier: Central Kenya’s Insurance Belt
Following Nairobi and Kiambu in the insurance uptake rankings is a cluster of Central Kenya counties that demonstrate relatively strong coverage rates by national standards. Murang’a recorded 11.3 percent insurance coverage, followed by Nyeri at 10 percent and Kirinyaga at 9.5 percent. This concentration of higher insurance uptake in the Central Kenya region reflects a combination of factors including historical advantages in education, strong traditions of formal employment and business ownership, established banking and financial services infrastructure, and relatively higher levels of financial literacy.
The Central Kenya counties have historically benefited from earlier and more extensive investment in education infrastructure, producing populations with higher literacy rates and greater exposure to formal financial systems. This educational advantage translates directly into insurance uptake, as the FSD survey confirms that education levels are among the strongest predictors of insurance coverage.
Additionally, these counties have strong traditions of entrepreneurship and formal business ownership, with many residents engaged in commercial agriculture, particularly coffee and tea farming, manufacturing, and various service industries. Business owners, recognizing the need to protect their assets and income streams, are more likely to invest in insurance products than those in purely subsistence activities.
The presence of cooperative societies, savings and credit cooperative organizations (SACCOs), and other financial intermediaries in these counties also facilitates insurance uptake by providing trusted channels through which residents can access and understand insurance products. These institutions often bundle insurance with other financial services, making coverage more accessible and comprehensible to members.
The Bottom Tier: Western and Coastal Counties Struggle
At the opposite end of the spectrum, several counties recorded alarmingly low insurance uptake rates that leave the vast majority of residents completely exposed to financial risks. Kisumu, Kenya’s third-largest city and the economic hub of the western region, recorded just 1.1 percent insurance coverage. Siaya recorded 1.2 percent, while Meru registered 1.3 percent.
These extremely low figures indicate that in these counties, fewer than two out of every 100 residents hold any form of personal insurance coverage beyond the government health scheme. This lack of protection means that families in these regions face catastrophic financial consequences from events that would be manageable for insured households—a serious illness, an accident that prevents work, a fire that destroys property, or the death of a breadwinner can push entire families into destitution.
The FSD report directly links higher insurance uptake to counties with stronger formal employment, thriving businesses, better literacy rates, and more stable household incomes. Conversely, counties with large informal economies and weaker financial infrastructure show far lower coverage rates. The survey specifically identifies Kitui, Taita-Taveta, Marsabit, West Pokot, Lamu, Homa Bay, and Kilifi as counties where insurance coverage remains particularly low.
These counties share several characteristics that constrain insurance uptake. Many have economies dominated by subsistence agriculture or fishing, activities that generate irregular incomes and leave little surplus for insurance premiums. Infrastructure deficits, including limited banking services and poor road networks, make it difficult for insurance companies to establish viable operations and for residents to access services even when they are available.
Additionally, some of these counties face recurring climate shocks such as droughts and floods that make them high-risk areas for insurers, potentially resulting in higher premiums that further reduce affordability. The combination of lower incomes and higher risk creates a vicious cycle where those who most need insurance protection are least able to afford it and least likely to be offered reasonable terms.
The Vulnerability Trap: How Lack of Insurance Perpetuates Poverty
The FSD survey emphasizes that limited insurance coverage exposes families to risks that can deepen and perpetuate poverty across generations. Without insurance, households facing unexpected expenses must rely on coping mechanisms that often prove destructive to their long-term economic prospects. These mechanisms include selling productive assets such as livestock or land, withdrawing children from school to save on fees or provide additional labor, taking on high-interest informal loans from moneylenders, and depleting savings that might otherwise be invested in income-generating activities.
Research on poverty dynamics consistently shows that uninsured shocks are among the primary drivers of families falling into poverty or remaining trapped in poverty even when they have begun to improve their circumstances. A medical emergency, for instance, can wipe out years of careful savings in a matter of weeks, forcing families to start over from an even more precarious position.
Globally, insurance is considered a fundamental component of financial inclusion and a critical indicator of economic stability and resilience. Countries with high insurance penetration rates tend to have more stable economic growth, as households and businesses can take calculated risks knowing they have protection against adverse outcomes. Conversely, low insurance coverage creates economic fragility, as individuals and families must remain extremely risk-averse, avoiding potentially beneficial investments or opportunities because they cannot afford the consequences if things go wrong.
The Urban-Rural and Formal-Informal Divide
The FSD survey findings underscore a persistent divide based on both geography and employment type. Urban and peri-urban counties with higher income diversity and formal job opportunities demonstrate substantially stronger insurance uptake compared to rural regions where informal and agricultural livelihoods dominate.
“By 2024, exclusion from insurance (excluding NHIF) remains highest among casual workers, dependents and agricultural livelihoods, suggesting that informal employment and financial vulnerability limit access,” the survey notes. “Those employed and business owners show relatively lower rates of exclusion. Those who are not financially healthy and in lower wealth quintiles consistently report high levels of insurance exclusion, while improvements are seen among financially healthier and wealthier individuals.”
This analysis reveals that insurance access in Kenya is fundamentally structured by economic class and employment status. Formal sector employees, particularly those working for larger organizations and government institutions, benefit from employer-sponsored insurance programs that provide coverage at group rates and often with the employer paying all or part of the premium. These employees may have health insurance, life insurance, and even property insurance without having to navigate the insurance market themselves or bear the full cost.
In contrast, those working in the informal sector—which accounts for approximately 83 percent of Kenya’s total employment according to KNBS—typically have no access to employer-sponsored coverage and must purchase insurance individually if they want protection. Individual policies are generally more expensive than group coverage and require the policyholder to have sufficient financial literacy to understand different products and make informed choices.
Agricultural workers and smallholder farmers face particular challenges. Their incomes are seasonal and unpredictable, making it difficult to commit to regular premium payments. Many insurance products are designed with urban, salaried workers in mind and do not accommodate the payment patterns of agricultural households. Additionally, agricultural insurance products that could protect against crop failure or livestock losses remain limited in availability and often prohibitively expensive relative to farmers’ incomes.
The survey data underscores a persistent socio-economic divide in the usage of insurance services, with access clearly stratified by wealth quintile, employment status, and financial health. Those in lower wealth quintiles and those classified as not financially healthy face systematic exclusion from insurance markets, while improvements in coverage are concentrated among wealthier and more financially secure segments of the population.
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The Transition from NHIF to SHIF: Mixed Results
The FSD survey was conducted during Kenya’s transition from the National Hospital Insurance Fund (NHIF) to the Social Health Insurance Fund (SHIF), a period of significant uncertainty and adjustment in the health coverage landscape. The transition has had notable impacts on insurance statistics and household financial security.
The survey reveals that insurance held in individuals’ own names fell from 6.9 percent in 2021 to 6.3 percent in 2024, representing a concerning decline in personal insurance ownership. Similarly, overall insurance access including NHIF decreased from 23.7 percent in 2021 to 22 percent in 2024, suggesting that the transition period may have resulted in some coverage gaps or that other factors have constrained insurance growth.
However, the data also shows some positive developments. Usage of insurance through employer-based schemes or as dependents rose from 11.4 percent to 13.7 percent for non-NHIF insurance and from 28.2 percent to 29.5 percent overall. This increase suggests that formal sector employers have been expanding their provision of insurance benefits to employees, potentially compensating somewhat for the decline in individually-held policies.
The transition from NHIF to SHIF was intended to expand health coverage and improve the quality of care available to Kenyans. The government argued that SHIF would be more equitable, with contributions based on income rather than flat rates, and would provide more comprehensive benefits. However, the transition has faced implementation challenges, including technical problems with the digital registration system, confusion about contribution rates and benefit packages, and concerns about the adequacy of healthcare facilities to handle the anticipated increase in patients seeking care.
Affordability: The Primary Barrier to Insurance Coverage
The FSD survey identifies affordability as the overwhelming barrier to insurance uptake, with 76.2 percent of uninsured respondents citing the cost of premiums as the reason they lack coverage. This finding indicates that the vast majority of uninsured Kenyans are not choosing to go without insurance because they see no value in it, but rather because they simply cannot afford to purchase policies given their income constraints and competing financial demands.
The affordability challenge is even more acute for women than for men, according to the survey. Women in Kenya typically earn less than men, are more likely to be in informal employment, and often have less control over household financial decisions. These factors combine to make insurance even less accessible for women, despite the fact that women may face particular risks, such as those associated with childbirth, that make insurance especially valuable.
Following affordability, lack of understanding of insurance products emerges as the second most significant barrier to uptake, particularly in rural areas where financial literacy levels are lower and exposure to insurance concepts is limited. Many Kenyans, especially those who have never held a formal job or interacted extensively with the formal financial system, struggle to understand how insurance works, what different types of policies cover, how to make claims, and whether insurance represents good value for money.
This knowledge gap creates an opportunity for insurance providers and financial education initiatives to expand coverage by making products more comprehensible and demonstrating their value in concrete terms that resonate with potential customers’ lived experiences. However, education alone cannot overcome the fundamental affordability constraint that keeps the majority of uninsured Kenyans from accessing coverage.
Other obstacles to insurance uptake identified in the survey include lack of a national identification card, which is typically required to purchase insurance and open the mobile money or bank accounts often used to pay premiums. While national ID coverage has expanded significantly in recent years, some Kenyans, particularly in remote areas or among marginalized communities, still lack this fundamental document.
Additionally, some uninsured respondents indicated that they perceive insurance as unnecessary, either because they feel they can self-insure through savings, because they rely on family and community support networks in times of crisis, or because they underestimate the probability and potential severity of adverse events. This perception is most common among young people who have not yet experienced significant health problems or financial shocks and may have optimism bias about their vulnerability to risks.
Limited trust in insurance providers also constrains uptake, with some potential customers expressing skepticism about whether insurers will actually pay claims when needed or whether they will find technical reasons to deny coverage. This trust deficit reflects both actual experiences of claims being denied or delayed and broader concerns about the integrity of financial institutions. Building and maintaining trust requires insurers to demonstrate consistent, fair, and timely claims processing and to communicate clearly about policy terms and exclusions.
Why Previously Insured Kenyans Let Coverage Lapse
Understanding why people who once had insurance subsequently let it lapse provides additional insights into the challenges facing the insurance sector. According to the FSD survey, among those who previously held insurance but no longer do, 61.4 percent cited high premiums as the reason they discontinued coverage, while 41.9 percent cited loss of income or employment.
These figures indicate that for many Kenyans, insurance coverage is precarious and highly dependent on maintaining stable employment and income. When people lose jobs or experience income reductions—whether due to business failures, economic downturns, health problems, or other factors—insurance is often among the first expenses they cut. This creates a perverse situation where people lose their insurance protection precisely when their economic vulnerability increases and they may need it most.
The high rate of coverage lapse due to affordability concerns also suggests that many insurance products may be priced at levels that are unsustainable for purchasers over the long term. While people may be able to afford premiums during periods of stable income, they cannot maintain coverage when circumstances change. This pattern reduces the effectiveness of insurance as a tool for long-term financial security and limits the insurance industry’s ability to build a stable customer base.
Education as a Decisive Factor in Insurance Access
The FSD survey demonstrates that education level is among the strongest predictors of insurance coverage in Kenya, with profound disparities between those with tertiary education and those with little or no formal schooling. Tertiary-educated Kenyans had 18.9 percent insurance coverage excluding NHIF, compared to just one percent for those without formal education.
This nearly 19-fold difference in insurance coverage between the most and least educated segments of the population reflects multiple mechanisms through which education influences insurance access. First, education is strongly correlated with income, as those with higher educational attainment typically secure better-paying jobs and have greater financial capacity to afford insurance premiums.
Second, education enhances financial literacy and the ability to understand insurance products, evaluate their benefits and costs, and navigate the often-complex process of purchasing policies and filing claims. Those with limited education may find insurance concepts confusing or intimidating and may be more vulnerable to misleading sales practices or unsuitable products.
Third, education is associated with formal sector employment, which often comes with employer-sponsored insurance benefits. University graduates and those with professional qualifications are far more likely to work in salaried positions with benefits packages that include health insurance, life insurance, and other forms of coverage.
“The survey revealed that access to insurance excluding NHIF varied by education level, reinforcing the findings that a lack of understanding contributes to low uptake among those without insurance in their own name,” the report states, highlighting how education creates both the financial means and the knowledge necessary to access insurance protection.
Regional Economic Performance and Insurance Patterns
The correlation between county economic performance and insurance uptake is unmistakable in the data. The counties that lead in insurance coverage are largely the same ones that contribute most significantly to national GDP. According to KNBS, Nairobi contributes 27.4 percent to the country’s economy, followed by Nakuru at 5.7 percent, Kiambu at 5.5 percent, Mombasa at 4.8 percent, Meru at 3.5 percent, and Machakos at 3.2 percent.
These counties benefit from diversified economies with strong manufacturing, services, tourism, and commercial agriculture sectors that generate formal employment and business opportunities. They also have better-developed financial infrastructure, with more bank branches, insurance agency offices, and digital financial services access points that make it easier for residents to engage with formal financial products.
In contrast, counties with lower economic output tend to have economies heavily dependent on subsistence agriculture or pastoralism, limited formal employment opportunities, and underdeveloped financial infrastructure. These structural economic differences create the conditions for persistent insurance access gaps that cannot be easily addressed without broader economic development interventions.
Policy Implications and the Path Forward
The stark disparities in insurance coverage across Kenya’s counties revealed by the FSD survey have significant implications for policymakers, regulators, the insurance industry, and development partners concerned with financial inclusion and poverty reduction.
First, the findings suggest that expanding insurance access requires addressing fundamental issues of affordability through innovative product design, subsidies for low-income households, or other mechanisms to bring premiums within reach of those currently excluded. Some possibilities include micro-insurance products with very low premiums and simplified coverage designed specifically for low-income and informal sector workers, index-based insurance for agricultural risks that uses satellite data or weather stations to trigger automatic payouts, reducing administrative costs, bundling insurance with other financial services through mobile money platforms or SACCOs to achieve efficiencies and build on existing trust relationships, and government subsidies or tax incentives to make insurance more affordable for target populations.
Second, financial education initiatives must be scaled up, particularly in rural areas and among populations with lower formal education levels. These initiatives should focus not just on explaining insurance concepts but on building broader financial literacy that helps people manage risks, plan for the future, and make informed decisions about financial products.
Third, insurance providers need to develop products that are better suited to the needs and payment patterns of informal sector workers and agricultural households. This includes allowing flexible payment schedules aligned with harvest cycles or irregular income patterns, using digital channels to reduce transaction costs and make coverage more accessible in remote areas, and designing products that address the specific risks faced by different occupational groups.
Fourth, regulatory frameworks should encourage innovation in insurance delivery while protecting consumers from mis-selling and ensuring that products provide genuine value. The Insurance Regulatory Authority has a critical role in creating an enabling environment for expanding insurance access while maintaining standards that protect policyholders.
Finally, addressing insurance access gaps requires acknowledging that insurance is not a substitute for broader economic development and social protection. While insurance can help families manage risks, it cannot compensate for inadequate incomes, lack of employment opportunities, or systematic regional inequalities. Expanding insurance coverage must be part of a comprehensive approach to inclusive economic growth that creates opportunities in currently marginalized regions and addresses the structural factors that keep millions of Kenyans in poverty.
The FSD survey findings serve as a wake-up call about the vulnerability of millions of Kenyan households and the work that remains to build a truly inclusive financial system that serves all citizens regardless of where they live or how they earn their living. Until insurance and other forms of financial protection become accessible to the majority rather than the privileged few, Kenya’s economic development will remain incomplete and millions of families will continue to live just one crisis away from financial disaster.
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By: Montel Kamau
Serrari Financial Analyst
25th November, 2025
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