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130,000 workers drop insurance covers as taxes, levies shrink payslips
Survey findings reveal that insurance usage differs by livelihoods where those employed account for the most insurance users totaling to 0.66 million followed by business owners at 0.45 million.
Over 130, 000 Kenyans dropped insurance covers in the wake of a drop in their disposal income, hurting Kenya’s drive to boost insurance penetration.
A survey conducted by the Central Bank of Kenya (CBK), FSD Kenya and Kenya National Bureau of Statistics (KNBS) indicates that Kenyans using insurance dropped to 1.77 million last year from 1.99 million.
The survey blamed lower disposable incomes for the drop in an economic setting where additional payslip taxes and levies have blunted workers' purchasing power.
This has been worsened by costly basic items and below-inflation pay increments, forcing workers to drop non-essential commodities like insurance from their budgets.
The withdrawal of risk covers has derailed Kenya’s quest to boost insurance penetrations which stands at 2.4 percent of GDP, which pales in comparison to South Africa and Namibia at 11 percent and 7.8 percent respectively.
“In 2024 the number of Kenyans using insurance with the exclusion of NHIF fell by about 0.13 million from 1.9 million in 2021 to 1.77 million, a clear indication of declining disposable incomes among Kenyans,” the survey notes. Workers' disposable income has shrunk on additional taxes and levies including the housing tax and the controversial healthcare insurance levy. The affordable housing law requires employers in the formal and informal sectors to deduct 1.5 percent of gross monthly pay to workers and match the contributions towards the housing levy.
The levy sparked an outcry from the opposition and many Kenyans, who feel burdened by the raft of taxes introduced under President William Ruto.
It was implemented nearly at the same time as the healthcare insurance levy, which requires people to contribute 2.75 percent of their monthly salaries to a social healthcare programme.
The survey shows that only 29.5 percent of households have an insurance cover, which are mostly cars insurance and company-sponsored medicals schemes.
This means that about 70.5 percent of Kenyan households lack insurance coverage, exposing them to risks such as illnesses, accidents fire and death.
The survey findings reveal that workers in the formal sector account for a larger share of those with insurance at 660, 000 compared with business owners (450, 000), agriculture (260,000), dependent (240,000) and casual workers (140,000).
Generally, gender gaps are evident in the uptake of insurance products as only 0.55 million females were consuming insurance products compared to 1.22 million males in 2024.
