News Africa02 Oct 2025

Kenya:National Financial Inclusion Strategy proposes raising payout cap in Policyholders Compensation Fund

| 02 Oct 2025

The Kenyan financial authorities will establish a periodic study review mechanism to assess and potentially increase the compensation ceiling of the Policyholders Compensation Fund (PCF), according to a draft of the Kenya National Financial Inclusion Strategy (2025-2028), released by the Central Bank of Kenya.

The review on the payout ceiling will be based on inflation, market changes, and policyholder needs, with an eye on increasing the current compensation cap of KES250,000 ($1,930) to KES500,000 per claim.

The Policyholders Compensation Fund (PCF), established under Kenya’s insurance law, compensates policyholders and third-party claimants when an insurer is placed under statutory management or has its license revoked. PCF contributes to the National Financial Inclusion Strategy (NFIS) by fostering trust, stability, and consumer protection within the insurance sector, thus promoting financial inclusion, especially among underserved populations.

Through involvement in statutory management and liquidation, PCF mitigates systemic risk, strengthening sector resilience crucial for inclusive financial systems.

The National Financial Inclusion Strategy for 2025-2028 is a product of collaboration involving the Central Bank of Kenya (CBK); The National Treasury (TNT); joint financial sector regulators Insurance Regulatory Authority (IRA), Capital Markets Authority (CMA), Retirement Benefits Authority (RBA); State Department for MSMEs Development; State Department for Gender and Affirmative Action; Kenya National Bureau of Statistics (KNBS); SACCOs Societies Regulatory Authority (SASRA), and safety net providers; Kenya Deposit Insurance Corporation (KDIC) and Policyholders Compensation Fund (PCF). Also involved in the strategy formulation process are industry associations.

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