Scaling insurance for climate resilience in Africa

The report examines Kenya's climate risk insurance landscape, highlighting the effectiveness of government-subsidised programmes like KLIP and KAIP, while identifying significant barriers such as inadequate weather data, low insurance penetration (2.4%), and a substantial adaptation funding gap of approximately KES 853bn annually. It argues for a multi-level risk transfer approach and improved data infrastructure to enhance the commercial viability and impact of climate insurance.

• Kenya faces severe climate vulnerabilities, with over 70% of natural disasters being climate-related. In 2024, floods affected 40 of 47 counties, causing more than 230 deaths and displacing 40,000 households.
• There is a significant funding gap for climate adaptation in Kenya, with an annual requirement of approximately KES 853bn ($6.6bn), of which 71% is needed for climate resilience. Most current climate finance is directed toward mitigation (79% in 2018) rather than adaptation (11.7% in 2018).
• The Kenyan insurance industry is struggling with profitability due to climate risks; the combined ratio in 2023 was 287%, meaning claims and operating expenses far exceeded premium income. Insurance claims increased by 13.3% in 2023.
• The Kenya Livestock Insurance Programme (KLIP) uses satellite-based NDVI data to provide index-based insurance to pastoralists. Between 2015 and 2021, it triggered $10m in private sector payouts, though administrative delays of over three months have been reported.
• The Kenya Agriculture Insurance Programme (KAIP) is a subsidised area yield index insurance product for crop farmers. By 2020, it insured approximately 750,000 farmers, representing about 20% of Kenya's 3.5 million small-scale crop farmers.
• Insurance penetration in Kenya remains very low at 2.4% as of 2023. Growth is hindered by inadequate weather data infrastructure in rural areas, inconsistent internet connectivity, and a lack of trust and awareness among farmers.
• Basis risk is a major barrier for index-based crop insurance, with estimates suggesting a 16% to 36% chance that farmers suffer losses without receiving compensation due to the mismatch between index triggers and actual local losses.
• Kenya's disaster risk financing is heavily skewed toward drought, which accounts for more than 92% of disaster financing, leaving a critical gap in coverage for floods, particularly urban flooding.
• The insurance sector's participation in adaptation is limited, though initiatives like the Nairobi Declaration on Sustainable Insurance and the Africa Climate Risk Insurance Facility for Adaptation (Acrifa) aim to align investments with climate goals and de-risk agri-food value chains.
• Public-Private Partnerships (PPPs) for adaptation are hindered by the lack of standardised climate-related project appraisal methodologies in Kenya's Public Investment Management (PIM) and inconsistent policy incentives, such as fluctuating VAT exemptions for renewable energy.

APA

African Climate Foundation (2024). Scaling insurance for climate resilience in Africa. https://africanclimatefoundation.org/wp-content/uploads/2026/06/KenyaFinalVersion2Dec.pdf

Chicago

African Climate Foundation. Scaling insurance for climate resilience in Africa. 2024. https://africanclimatefoundation.org/wp-content/uploads/2026/06/KenyaFinalVersion2Dec.pdf.

Wikipedia

{{cite report |author=African Climate Foundation |title=Scaling insurance for climate resilience in Africa |date=2024 |url=https://africanclimatefoundation.org/wp-content/uploads/2026/06/KenyaFinalVersion2Dec.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{africanclimatefoundation2024scaling, author = {{African Climate Foundation}}, title = {{Scaling insurance for climate resilience in Africa}}, institution = {African Climate Foundation}, year = {2024}, url = {https://africanclimatefoundation.org/wp-content/uploads/2026/06/KenyaFinalVersion2Dec.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }