By Benadeta Mwaura - Reporter
Kenya, 5 May 2026 - Old Mutual has paid out more than KSh 200 million ($1.55 million) in flood-related claims, underscoring the growing financial toll of extreme weather events on Kenya’s insurance sector and the wider economy.
According to the insurer, the payouts were made over the past year as floods emerged as one of the leading causes of claims, affecting property, vehicles, crops and livelihoods across the country.
The company is now assessing additional losses from the latest wave of heavy rains, signalling that the pressure on insurers is far from over.
Speaking at a national TV station in Kenya, Managing Director Japheth Ogalloh said the scale and frequency of such claims are increasing.
“We had floods last year and into this year in the first quarter. Last year, we paid over KSh 200 million worth of flood-related claims. In general, risks related to climate change are becoming more frequent and severe,” he said.
The development places Old Mutual among a growing list of insurers facing mounting costs linked to climate-related disasters. Industry data shows that Kenya’s insurance sector has already absorbed billions in flood-related losses in recent years, with claims topping KSh 5 billion during the 2024 floods alone.
Other major insurers have also reported significant payouts, including CIC General and Britam, which faced claims running into hundreds of millions of shillings following extreme weather events.
The surge in flood-related claims is forcing insurers to rethink how they price risk and structure their policies. With extreme weather events becoming more frequent and intense, traditional risk models are increasingly under pressure.
Industry players warn that the current trend could lead to higher insurance premiums, stricter policy terms, and reduced coverage in high-risk areas. Some insurers are already reviewing their pricing frameworks to reflect the growing exposure to climate-related losses.
Beyond the insurance sector, the economic implications are significant. Floods have repeatedly caused widespread destruction of homes, infrastructure, and agricultural output, with total losses, both insured and uninsured, estimated to run into tens of billions of shillings annually in Kenya.
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Despite the rising risks, insurance penetration for climate-related events remains low, leaving many households and businesses exposed. Experts say this gap is driven by limited awareness, affordability challenges, and the complexity of pricing climate risks.
The situation has sparked calls for more innovative solutions, including public-private partnerships and specialised insurance pools to spread risk and improve coverage for vulnerable communities.
At the same time, increased urbanisation and settlement in flood-prone areas are compounding the problem, exposing more assets to potential damage and further raising the cost of disasters.
The KSh 200 million payout by Old Mutual is more than just an insurance statistic, it is a reflection of a broader shift in risk across the Kenyan economy.
As climate-related events intensify, businesses, insurers, and policymakers are being forced to adapt to a new reality where extreme weather is no longer occasional, but increasingly frequent and costly.
The challenge is balancing sustainability with affordability. For the government, it is about strengthening resilience and mitigation. And for ordinary Kenyans, it is yet another layer of economic pressure in an already difficult environment.
The message from the industry is clear: climate risk is no longer a future threat, it is already here, and its cost is rising.