Crop, livestock insurance uptake nearly doubles to Sh2bn amid climate risk

The sharp rise reflects a changing mindset in a country where insurance has traditionally been limited to motor, medical and property covers.

Increasingly, farmers are insuring a wide range of assets, from cattle and poultry to more unconventional items such as camels, pigs, goats, horses, flowers, sheep, trees, potatoes, and coffee.

The cover is concentrated in both arid and semi-arid counties such as Turkana, Marsabit, Mandera, Wajir, Garissa and Isiolo, alongside highland regions including Nyandarua, Murang’a, Kiambu, Nakuru and Uasin Gishu.

The expansion of agricultural insurance is closely linked to the rising frequency and severity of climate change-related events such as droughts and floods, which have, in recent years, wiped out crops and livestock across large parts of the country.

Farmers, lenders and insurers are responding by embedding risk-transfer mechanisms into agricultural production, making insurance a key tool for resilience. IRA data shows last year alone, insurers and micro-insurers settled agricultural insurance claims worth Sh213.19 million to customers.

Insurers have said in the past the growing awareness among commercial farmers, coupled with stricter lending requirements by banks, has accelerated uptake, with credit increasingly tied to proof of insurance.

Programmes such as the World Bank-backed De-Risking, Inclusion and Value Enhancement of Pastoral Economies (Drive) project, which is being implemented by ZEP-Re, have also played a key role in scaling the uptake of agricultural insurance.

The Drive initiative, implemented in partnership with local insurers, bundles insurance products for pastoralists covering cattle, sheep, goats and camels, particularly in arid and semi-arid regions that are most vulnerable to drought.

By 2025, the Drive programme had reached 3.3 million pastoralists and dependents, with thousands of pastoralists covered through more than 630,000 policies. ZEP-Re said 99 percent of claims are settled within 23 days, reinforcing trust in the product.

Mainstream insurers such as APA, CIC, Geminia, Mayfair, Old Mutual, Heritage, Britam, Fidelity, GA and Intra Africa are among those offering agricultural covers alongside their micro-insurance wings.

CIC and APA Insurance have been particularly active in livestock cover, riding their wide distribution networks and partnerships to reach smallholder farmers. Britam, through its micro-insurance subsidiary Britam Connect, has focused on embedding crop and livestock insurance into credit products.

GA Insurance has also carved a niche in the segment by expanding beyond traditional livestock and crop cover into aquaculture through its Samaki Bima product, which protects fish farmers against risks such as oxygen depletion, predation and water pollution.

ICEA Lion and Fidelity Shield, on the other hand, have handled some of the more unconventional policies, including large-scale crop and tree insurance as well as cover for high-value animals, signalling the growing appetite for customised solutions among commercial farmers and high-net-worth individuals.

The participation of multiple insurers has deepened competition and innovation in the market, driving product development, improving pricing models and expanding outreach to farming communities that were previously left out by conventional covers.

Technology is further driving adoption of agricultural insurance through the rollout of index-based and parametric insurance products that rely on satellite data and weather indices rather than traditional loss assessments.

Index-based and parametric products trigger payouts automatically when pre-defined indicators such as rainfall levels or vegetation cover fall below certain thresholds, eliminating the need for costly and time-consuming farm inspections.

The growing importance of agricultural insurance has prompted IRA to move in and establish a legal framework to guide the development of new products and protect policyholders.