How IFRS 17 Is Redefining Insurance Reporting In Kenya And Across Africa

For years, insurance accounting in Africa relied on a patchwork of practices that hindered comparability and often obscured real performance. The arrival of IFRS 17, effective for periods beginning on or after January 1, 2023, has, however, changed that center of gravity by replacing judgment-heavy revenue recognition with a consistent, contract-based model that measures obligations and profit over time. This reset improves how boards, regulators, investors, and policyholders read an insurer’s true financial story.

The impact of this shift is already visible in Kenya, where on March 22, 2023, the Insurance Regulatory Authority activated Section 54 of the Insurance Act to require IFRS 17 reporting, moving local carriers onto the same footing as global peers. That decision aligned with the country’s multi-year transition to risk-based supervision, a journey that began in earnest in 2017 and is now supported by international guidance that explicitly links solvency thinking with IFRS 17 measurement. The result is a more coherent prudential and reporting regime, where the way we book liabilities is consistent with how regulators assess resilience.

But why does this matter in practice?

IFRS 17 requires insurers to separate groups of contracts into components that reflect expected cash flows, risk adjustment, and the contractual service margin, then release profit as service is provided. Under IFRS 4, many African carriers recognized premiums as top-line and used familiar ratio language to explain performance, but earnings patterns were often front-loaded and did not always track the economics of long contracts. With IFRS 17, income statements look unfamiliar at first and premium volume is no longer revenue, but they are more faithful to the underlying services we provide. Analysts now focus on movements in the insurance service result, risk adjustment disclosures, and the unwinding of the contractual service margin. This allows boards to see whether growth is value accretive or simply balance-sheet intensive.

Such change is timely considering Africa’s insurance market, although having generated about $63.5 billion (KSh8.2 t) in premiums in 2023, still accounts for less than 1 percent of global share, and remains dominated by a handful of markets. Penetration across the continent sits near 3.5% of GDP, with significant headroom in East Africa. Kenya, on its part, illustrates both the opportunity and the challenge, as the industry counts more than 60 licensed players, yet penetration has hovered around 2.3 percent, well below the global average. Against this backdrop, transparent, decision-useful reporting is essential if we want to attract long term capital, reduce the cost of equity, and scale protection in retail and corporate lines.

For finance leaders, the biggest win from IFRS 17 is better risk pricing discipline. When cash flow estimates, discount rates, and risk adjustments must be explicitly updated and explained, weakly priced products reveal themselves quickly. In general insurance, onerous groups become visible early, prompting faster remediation. In life and long-term savings, the contractual service margin quantifies embedded future profit and highlights sensitivity to lapses, expenses, and investment spreads. In both cases, product committees gain a richer dashboard to course-correct before losses harden.

The standard also sharpens dialogue with regulators and investors. Kenya’s move to risk-based supervision, for example, means capital conversations are already forward-looking. IFRS 17 adds consistent liability measurement and granular disclosures, improving the linkage between solvency coverage, liquidity stress outcomes, and reported performance. The market can now compare carriers on a like-for-like basis across Africa and against international peers, improving confidence for cross-border reinsurers and institutional investors that anchor growth.

The transition to IFRS 17 has, however, come with costs, with system upgrades, actuarial engines, and data remediation requiring multi-year investments. Many insurers have had to reconstruct historical cohorts and unlock data sitting in manual claims files or legacy policy administration systems. Finance teams have also been required to relearn performance narratives for boards and the market. On the flip side, these strains are producing durable benefits as closing the loop between policy, claims, reinsurance, investments, and finance has accelerated data quality improvements that spill over into underwriting and fraud management.

Against this backdrop, Kenyan insurers now face three practical imperatives. First, treat IFRS 17 metrics as management tools, not compliance outputs. Use the new disclosures to set hurdle rates by cohort and channel, and to align incentive plans with value creation rather than gross written premium. Second, strengthen the bridge between actuarial and finance. Joint ownership of assumptions, model governance, and sensitivity analysis helps ensure the numbers support pricing and reinsurance strategy, not just the audit file. Third, communicate early and often. Investors will reward clarity on the drivers of contractual service margin growth, the approach to discounting and risk adjustments, and the path from the insurance service result to operating cash generation.

Ultimately, if our reporting does not explain risk and reward with precision, capital will remain scarce and expensive. Additionally, we must always be alert to the fact that IFRS 17 will not write better policies on its own, but it will give leaders the sightlines to do so with conviction.

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Michael Kamau is the Resident Actuary at Minet Kenya