Why expedited claims settlement matters more than low premiums

At its core, insurance exists to protect livelihoods, preserve capital, and enable recovery. However, when claims settlements are delayed or uncertain, that promise is undermined, and the policyholders are forced to absorb the immediate shock themselves at the moment they are most vulnerable.

Delayed settlements have real economic consequences. Families are forced to draw down savings, incur debt to meet medical costs, or leave productive assets idle as they watch their income evaporate.

In these circumstances, the price of the premium becomes irrelevant. What matters is whether the insurer can respond decisively and on time. The speed of settlement becomes the true measure of protection.

This reality is playing out against a backdrop of sustained claims pressure across Kenya’s insurance sector. In the first half of 2025 alone, insurers paid out a country record of Sh114.7 billion in claims, according to the Insurance Regulatory Authority report.

While these payouts demonstrate the industry’s growing role in absorbing risks and stabilising the economy, they also reinforce a fundamental principle: Insurance only delivers value when claims are settled in time and predictably.

Insurance is, by design, an intangible promise. Customers buy policies in anticipation of protection, but trust is ultimately earned during claims settlement. It is in that moment that families assess whether they can recover without financial distress, businesses determine whether operations can resume, and confidence in the insurance system is either reinforced or diminished.

In an industry grappling with persistently low uptake, these moments carry outsized consequences.

When claims are delayed, disputed, or poorly communicated, they do more than inconvenience individual policyholders; they reinforce long-standing skepticism about the value of insurance itself.

Each negative claims experience becomes a cautionary tale, retold among families, businesses, and communities, quietly discouraging first-time buyers and eroding public confidence in a product that exists primarily on trust.

This is why claims have become the defining battleground for the industry. Consumer complaints consistently point to delays and lack of transparency as the biggest sources of dissatisfaction. When insurance fails at the point of need, confidence erodes not just in one provider, but in the idea of insurance itself.

Speed in claims settlement, however, is not determined by insurers alone. It rests on a foundational principle of insurance: utmost good faith. Insurance contracts are built on mutual trust. While insurers have a duty to assess and settle claims fairly and promptly, policyholders equally have an obligation to fully and accurately disclose all material facts at the point of underwriting and during claims.

Where disclosure is incomplete or inaccurate, whether through omission or misrepresentation, claims adjudications inevitably take longer, disputes arise, and settlement timelines are extended. In practice, a meaningful proportion of delays stems not from bad faith by underwriters but from information gaps that must be clarified to protect the integrity of the insurance pool.

Utmost good faith is therefore not an abstract legal concept; it is a practical enabler of speed. When customers disclose honestly and engage transparently, claims move faster, outcomes are clearer, and trust is reinforced on both sides. Faster claims require shared responsibility.

Consumer complaints nonetheless point consistently to delays and lack of transparency as the biggest sources of dissatisfaction. As of September 2025, the Insurance Regulatory Authority recorded 532 consumer complaints, with claims delays cited as the leading cause of dissatisfaction.

These delays disrupt cash flow, increase financial strain, and place extra pressure on households and enterprises already operating close to the edge.

At the same time, sustained claims pressure is exposing the limits of price-led competition. In the 2024 financial year alone, Old Mutual paid out over Sh16.7 billion in claims, reflecting both the scale of risk being absorbed by insurers and the growing importance of balance-sheet strength, operational efficiency, and disciplined claims management.

Claims are a promise fulfilled, the benefit customers pay for, and the service that proves insurance works.

When delivered promptly, they restore cash flow, reduce distress, and allow households and businesses to begin recovery immediately. In medical emergencies, they determine access to care and preserve dignity. For businesses, they mean quicker repairs, reduced downtime, and continuity of operations.

Efficient claims settlement also has measurable economic implications. During the third quarter of 2025, non-liability claims recorded a payment ratio of 63.62 percent, while microinsurance payouts doubled to Sh261 million according to IRA’s Quarter 3 report. Faster claims settlement directly strengthens household resilience.

Equally important is fairness. One of the most damaging perceptions in insurance is that claims outcomes depend on influence, persistence, or escalation. Such perceptions erode institutional credibility and undermine trust in the system as a whole.

This principle reflects a broader shift across financial services, where customers value reliability over relationships. In a digitising economy, institutions earn trust through repeatable outcomes, not favours.

The insurance sector is evolving. Automation, improved risk assessment, and digital claims platforms are reshaping how risks are assessed and settled. Customers now expect real-time updates, clear explanations, and predictable outcomes as standard.

These changes are reshaping how insurance is evaluated. The central question is no longer simply, “How cheap is this policy?” Today, insurers prove their worth by how quickly, clearly, and fairly they settle claims when it counts. As risks grow more complex and claims volumes rise, the future of insurance trust will be defined not by price competition, but by the industry’s ability to honour its promise at the moment of need.

Mr Ogalloh is the Managing Director of Old Mutual General Insurance Kenya