The report, titled “2025/26 Deloitte Africa Insurance Outlook”, presented by Mr Charles Luo, Partner, and Mr Timothy Machira, Associate Director, of Deloitte Africa, said, “This progress has been achieved despite persistent headwinds, including low insurance penetration rates, macroeconomic uncertainty and relatively high unemployment. The total insurance penetration rate for the region stood at 1.57%, with insurance penetration at 2.61% in Kenya, 0.60% in Tanzania, 0.83% in Uganda and 0.3% in Ethiopia.”
Opportunities and challenges
The report added that the East African insurance sector promises strong growth potential, underpinned by digital innovation, financial inclusion and demographic shifts. Digital platforms are enabling new product offerings, while microinsurance and cross-industry partnerships are extending reach into underserved markets. Embedded on-demand services, together with infrastructure development and rapid population growth, create further market possibilities for insurers to broaden access.
Financial inclusion initiatives, particularly in rural areas, are also expected to expand coverage for uninsured populations.
Challenges
Despite these opportunities, the sector continues to face significant challenges. Competition from new entrants is intensifying, while fraud remains a critical concern for both profitability and consumer trust.
Complex regulatory environments, persistently low insurance penetration rates and limited awareness constrain growth. In addition, slow adoption of technology, reliance on traditional distribution methods and modest innovation levels impede operational efficiency and limit access to underserved markets.
Emerging and anticipated trends for the insurance industry
AI’s transformative impact
Across East Africa, insurers are embedding AI and Machine Learning (ML) in their digital transformation strategies. For instance, ICEA LION is deploying AI to automate underwriting instructions, boosting efficiency and improving customer satisfaction.
Britam has integrated digital initiatives, including AI, as part of its revenue diversification strategy. Jubilee Group’s digital transformation agenda includes AI-led process improvements, such as claims adjudication and automation of repetitive processes, which have enhanced efficiency. Old Mutual has rolled out AI and ML capabilities to capitalise on customer analytics, enabling more targeted strategies and delivering greater value.
ESG and climate impact
East Africa is particularly vulnerable to climate change, with the region experiencing more frequent and severe weather events. Prolonged droughts in the Horn of Africa, catastrophic floods in Kenya and recurring cyclones making landfall in Mozambique highlight the urgent need for insurers and reinsurers to reassess risk models. These challenges also present opportunities to innovate with products such as green insurance and parametric insurance in agriculture.
Advances in data analytics and AI are enabling more sophisticated climate risk modelling and improved predictive capabilities. This creates scope for insurers to design more responsive solutions in areas such as cyber insurance, agricultural insurance and insurance technology (InsurTech). While limited innovation and low technology adoption remain constraints, embedding ESG and climate considerations into business models will be critical for managing risk, strengthening resilience and contributing to broader socio-economic stability and sustainability goals.
Optimising insurance across demographics
East Africa’s insurance sector is undergoing a shift driven by changing customer expectations, technological advancements and diverse economic conditions. Demographic differences are shaping demand: younger adults (18-35) favour quick, mobile-first services and microinsurance; middle-aged consumers (36-55) seek a mix of digital convenience and personal interaction with a focus on long-term stability; and mature individuals (55+) prefer in-person engagement and straightforward policy structures. Regional differences also play a role, with urban consumers leaning toward digital solutions and rural populations needing affordable, accessible options.
Insurers are responding by implementing digital onboarding, hybrid service models and mobile-centred products. Notable examples include Britam’s digital claims handling, Airtel Tigo and BIMA’s airtime-linked insurance, and Pula’s satellite-enabled agricultural coverage. To deepen customer engagement, insurers are investing in user-friendly mobile apps, chatbots, SMS/USSD solutions and simplified offerings. Partnerships with mobile operators, faster claims processing and data-driven personalisation are further building and enhancing reach and relevance.
IFRS 17
The adoption of IFRS 17 has become a key part of operations for insurers in East Africa and globally, transforming how financial performance is measured and reported.
As the standard becomes embedded in daily operations, improvements are evident in transparency, financial reporting accuracy and regulatory compliance. The shift from IFRS 4 to IFRS 17 has also helped stabilise financial outcomes and reduce equity volatility, supporting investor confidence and more effective strategic planning.
Despite this progress, several post-implementation challenges remain. Resistance to change, skill shortages and costly IT upgrades have hindered some insurers, especially smaller players still reliant on manual processes. Data quality and integration issues persist, and aligning actuarial and accounting practices continues to require effort. Nevertheless, IFRS 17 has prompted insurers to strengthen internal controls, refine contract grouping methods, and adopt analytics for data-driven decision-making.
Looking ahead, insurers in East Africa are expected to focus on enhancing actuarial models, upgrading systems and leveraging analytics to improve pricing, risk management and profitability. Close collaboration with regulators and continued investment in innovation will be crucial for sustaining growth and building long-term resilience in a rapidly evolving market.
Regulatory environment
The insurance sector in East Africa is undergoing significant regulatory transformation, aimed at driving growth, innovation while enhancing financial inclusion.
Uganda’s introduction of takaful, a Sharia-compliant insurance offering, is diversifying the market and attracting Islamic finance investment. This is driving competition while expanding ethical insurance options.
Tanzania mandates insurance for public facilities, which has been introduced to protect state assets, strengthen premium revenues and enhance public trust in the sector.
In Kenya, the transition to the social health insurance fund supports universal health coverage. The scheme requires contributions from formal sector employees and encourages participation from the informal sector participation, prompting insurers to adapt underwriting practices.
In Ethiopia, the establishment of an independent insurance regulatory body is expected to improve oversight, stimulate innovation, attract foreign investment and encourage product diversification.
Together, these reforms signal a positive shift towards greater inclusion, transparency and competition, strengthening the foundation for sustainable growth in East Africa’s insurance markets.
Inflection point
The East African insurance industry stands at an inflection point where resilience, adaptability and innovation will determine its future trajectory. Sustained progress will depend on how effectively insurers leverage AI and data, embed ESG principles, respond to climate-related risks, tailor solutions across demographic groups and adapt to evolving regulatory frameworks.