IFRS 17 in Kenya — Insurance Contracts Guide

Q: Is IFRS 17 in Kenya mandatory?

Yes. Since 1 January 2023, all licensed insurers and reinsurers in Kenya must comply with IFRS 17, under the oversight of the Insurance Regulatory Authority (IRA) and ICPAK.

Q: Is IFRS 17 difficult to implement?

It can be complex, especially for smaller insurers, but it’s manageable with proper systems, actuarial models, and professional support.

Q: What’s the difference between IFRS 4 and IFRS 17 in Kenya?

IFRS 4 – Insurance Contracts was a temporary standard introduced in 2004 that allowed insurers to continue using their local accounting policies, creating inconsistencies. IFRS 17 replaces IFRS 4 with a unified and transparent model for all insurers globally. Read our simplified guide to understand more about IFRS 4 in Kenya.

Q: What’s the difference between IFRS 16 and IFRS 17 in Kenya?

IFRS 16 – Leases explains how businesses should account for rented assets such as offices, vehicles, or machinery — treating them as both an asset and a liability. IFRS 17 – Insurance Contracts focuses on how insurers record and report insurance policies and risk exposures. For a simple breakdown of lease accounting, check out our beginner’s guide to IFRS 16 in Kenya.

October 31, 2025

Table of Contents

Introduction – Why IFRS 17 Matters for Kenyan Businesses
Key Terms Explained (Before We Dive In)
What Is IFRS 17 in Kenya in Very Simple Terms?
What Are Insurance Contracts Under IFRS 17 in Kenya?
History of IFRS 17 in Kenya
What Is the IFRS 17 Effective Date?
What Are the Three Methods of IFRS 17 in Kenya?
Key Objectives of IFRS 17 – Insurance Contracts
Scope of IFRS 17 in Kenya
Seven Basic Principles of an Insurance Contract Under IFRS 17 in Kenya
What Did IFRS 17 – Insurance Contracts Replace?
Requirements of IFRS 17 in Kenya
Who Is Eligible and Who Is Exempt from IFRS 17 in Kenya
IFRS 17 Adoption in Kenya
Challenges Facing Implementation of IFRS 17 in Kenya
FAQs on IFRS 17 in Kenya
Myth vs Fact – Clearing Common Misconceptions
Conclusion – Why IFRS 17 in Kenya Matters for You
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Disclaimer

Introduction – Why IFRS 17 Matters for Kenyan Businesses

When you pay your motor or medical insurance premium to Britam, Jubilee, or CIC Group, have you ever wondered — when do they actually recognise that money as income?

Before IFRS 17 in Kenya, every insurer in Kenya had its own answer.

Some recorded premium income upfront, others spread it out over the policy period.

The result?

Financial reports that were hard to compare and sometimes confusing to interpret.

That’s where IFRS 17 – Insurance Contracts comes in.

It’s a global standard issued by the International Accounting Standards Board (IASB) to bring consistency, transparency, and comparability to how insurers measure and report insurance contracts.

For Kenya’s insurance industry, this isn’t just an accounting update — it’s a step toward stronger governance, investor confidence, and public trust.

In this simple guide, Mugo & Company explains IFRS 17 in Kenya — what it means, why it matters, and how insurers can navigate this change with clarity and confidence.

Insurance accounting can feel complex — especially when it comes to when and how insurers recognise revenue.

Unsure how IFRS 17 affects your insurance business in Kenya?

Request your FREE IFRS Consultation with Mugo & Co today

Key Terms Explained (Before We Dive In)

Before we go further, here are a few key terms you’ll keep seeing under IFRS 17 in Kenya

Terms	What It Means (Simple English)
IFRS 17 – Insurance Contracts	– The international accounting standard that tells insurers how to record and report their insurance contracts.
Insurance Contract	– A promise by an insurer (e.g. Britam) to cover losses if something uncertain happens — like an accident, illness, or fire.
Policyholder	– The person or business buying insurance — for example, you paying CIC for motor insurance.
Liability	– What the insurer expects to pay in future claims.
Contractual Service Margin (CSM)	– The profit the insurer expects to earn from a contract — spread over its life, not booked all at once.

What Is IFRS 17 in Kenya in Very Simple Terms?

Imagine you run an insurance company in Nairobi.

You sell medical cover, collect premiums from clients, and promise to pay if something happens.

Under the old IFRS 4, you could decide when to record revenue — some insurers took it all at once, others spread it out.

Now under IFRS 17, everyone must follow one global model:

– Recognise revenue gradually as you actually provide insurance coverage over time — not the moment you receive premiums.

This makes financial results between Kenyan insurers like Britam and Jubilee Holdings much easier to compare.

In simple terms:

IFRS 17 in Kenya ensures that insurance profits are recognised fairly, consistently, and transparently.

Understanding premium recognition and insurance liabilities doesn’t have to be overwhelming.

Let Mugo & Company walk you through IFRS 17 step-by-step — in language you’ll actually understand.

Request your FREE IFRS Consultation with Mugo & Co today

What Are Insurance Contracts Under IFRS 17 in Kenya?

An insurance contract is any agreement where an insurer accepts significant risk from a policyholder — meaning the insurer could lose money if the insured event occurs.

In Kenya, some examples include:

Life assurance e.g from ICEA Lion Life
Medical or motor cover fe.g from Britam General
Crop or livestock insurance e.g from CIC Group
Micro-insurance for boda boda riders or SMEs

Each of these contracts carries uncertainty — something might happen, or it might not.

IFRS 17 in Kenya gives insurers one clear framework for how to measure and report that uncertainty in their financial statements

A Simple Kenyan Example:

Imagine Wanjiku buys a one-year health cover from Jubilee Health for KSh 60,000.

Under the old IFRS 4 rules, Jubilee could record the full KSh 60,000 as income upfront.

But under IFRS 17, things change.

Jubilee must now recognise that income gradually, month by month — as it actually provides the insurance coverage.

That means:

Wanjiku’s premium is matched to the period she’s protected,
and Jubilee’s reported profits finally reflect the service delivered, not just the cash received.

History of IFRS 17 in Kenya

Like most global standards, IFRS 17 didn’t appear overnight.

It evolved over nearly two decades — from the early days of temporary rules under IFRS 4 to the full rollout that now governs how Kenyan insurers report their performance.

Year/ Phase	Key Milestone	What It Meant for Kenya
2004	IFRS 4 – Insurance Contracts introduced	– Served as an interim (temporary) standard allowing each country (including Kenya) to use its own insurance accounting practices.
2017	IASB issued IFRS 17 – Insurance Contracts	– It marked the first truly global standard for insurance accounting, replacing IFRS 4’s inconsistencies.
Original Effective Date: 1 Jan 2021	Global rollout scheduled after 3.5 years of transition.	– Allowed insurers worldwide time to prepare systems and gather feedback through over 900 meetings and 600 comment letters.
2019 – 2022	Transition and Capacity Building	The Institute of Certified Public Accountants of Kenya (ICPAK) and the Insurance Regulatory Authority (IRA) conducted nationwide workshops and training sessions to ready insurers for implementation.
1 Jan 2023	Mandatory IFRS 17 adoption in Kenya	All licensed insurers and reinsurers in Kenya began reporting under IFRS 17, marking a new era of consistency, transparency, and comparability.

What Is the IFRS 17 Effective Date?

Globally, IFRS 17 – Insurance Contracts became effective on 1 January 2021, officially replacing IFRS 4 – Insurance Contracts.

However, in Kenya, insurers were granted a two-year transition period to prepare for full implementation.

With support from the Insurance Regulatory Authority (IRA) and the Institute of Certified Public Accountants of Kenya (ICPAK), this transition focused on system upgrades, staff training, and impact assessments across the sector.

Mandatory effective date in Kenya: 1 January 2023

From this date onward, all licensed insurers and reinsurers preparing full IFRS financial statements are required to comply with IFRS 17 – Insurance Contracts.

What Are the Three Methods of IFRS 17 in Kenya?

Under IFRS 17 in Kenya, insurance companies don’t all measure their contracts the same way.

Instead, they choose from three main methods, depending on how long the cover lasts and how it works.

Think of these methods like different “recipes” for recognising income and profit.

Method	Used For	Simple Explanation (Kenyan Example)
1. General Measurement Model (GMM)	Long-term or more complex insurance policies	– This is the “full and detailed” method. – The insurer looks at all expected future premiums, claims, and risks, then spreads profit over the life of the policy. – Example: ICEA Lion Life selling a 10-year life assurance plan — profits are recognised gradually, not all at once.
2. Premium Allocation Approach (PAA)	Short-term covers — like motor, medical, or travel insurance	– A simpler “month-by-month” approach, used for one-year policies that renew regularly. – Example: Britam or CIC General selling annual motor insurance — income is recognised as each month of cover passes.
3. Variable Fee Approach (VFA)	Life policies where customers share in investment returns	– Used when policyholders earn a portion of the investment profits made by the insurer. – Example: ICEA Lion or Sanlam Life policies that invest your premiums and share part of the return with you.

In simple terms:

Short-term policies like motor or health insurance – use the (Premium Allocation Approach PAA.)
Long-term policies like life assurance – use the GMM or VFA.

The goal is to make sure each insurer in Kenya records its profits fairly — showing what has actually been earned, not just what’s been received.

What are the Key Objectives of IFRS 17 - Insurance Contracts

Consistency: One accounting model for all insurance contracts.
Comparability: Enables fair comparison between insurers, products, and regions.
Transparency: Clearer reporting of profits and obligations.
Investor Confidence: More reliable insights into insurer performance.
Regulatory Alignment: Supports IRA’s goal of aligning Kenyan insurers with international best practice.

Objective of IFRS 17	What It Means (in Simple Terms)
1. Consistency	– All insurers now follow one accounting model for insurance contracts.
2. Comparability	– Makes it easier to compare performance between insurers, products, and even countries.
3. Transparency	– Gives a clearer view of an insurer’s true profits, risks, and future obligations.
4. Investor Confidence	– Builds trust through reliable and consistent financial statements.
5. Regulatory Alignment	– Helps Kenya align with international best practices in insurance reporting.

What is the Scope of IFRS 17 in Kenya

IFRS 17 Applies To	IFRS 17 Does Not Apply To
– All insurance and reinsurance contracts	– Manufacturer warranties – handled under IFRS 15 (Revenue)
– Investment contracts with discretionary participation features	– Employer benefit obligations – covered under IAS 19 (Employee Benefits)
– Reinsurance held – when a Kenyan insurer transfers risk to a global reinsurer like Swiss Re or Munich Re	– Financial guarantee contracts – handled under IFRS 9 (Financial Instruments)

In short:

If your company issues or holds insurance contracts — whether life, health, motor, or agricultural — IFRS 17 in Kenya applies to you

Still wondering how to recognise premiums and profits under IFRS 17?

We’ll show you how to record insurance income correctly — just like Kenya’s top insurers do.

Request your FREE IFRS Consultation with Mugo & Co today

Seven Basic Principles of an Insurance Contract Under IFRS 17 in Kenya

Here are the seven basic ideas behind every insurance contract under IFRS 17, explained simply:

Insurance Principles under IFRS 17 in Kenya
1. Identify all insurance contracts clearly – Know which policies actually transfer risk (for example, a motor cover at Britam or a life policy at ICEA Lion).
2. Group similar contracts together – Combine policies with the same risk level or profit pattern — like health, motor, or life products — for easier tracking.
3. Estimate all expected future cash flows – Think ahead: what premiums will come in and what claims or expenses will go out?
4. Recognise revenue gradually – Don’t record the entire premium at once. – Recognise it monthly or as the insurer provides cover — just like Jubilee Health does for annual medical policies.
5. Reflect risks realistically – Consider both financial risks (like interest rates) and non-financial risks (like accident frequency or drought for crop covers).
6. Track the remaining profit (Contractual Service Margin) – This simply means keeping a record of profit yet to be earned — showing how much of the service is still to be delivered.
7. Be transparent with assumptions and results – Insurers must clearly explain how they calculated profits, claims, and future estimates — helping investors and policyholders understand performance better.

In short:

IFRS 17 in Kenya helps insurers in Kenya report results more fairly — showing profits when they are truly earned and risks as they really are.

What Did IFRS 17 - Insurance Contracts Replace?

IFRS 17 replaced IFRS 4 – Insurance Contracts, which let insurers use their own accounting rules.

As a result, two Kenyan insurers could report the same product in completely different ways — confusing investors and regulators.

IFRS 17 solved this by introducing one consistent global standard for all insurance contracts.

Transitioning from IFRS 4 to IFRS 17 can feel daunting.

Our experts help you implement IFRS 17 correctly and consistently across your business.

Request your FREE IFRS Consultation with Mugo & Co today

IFRS 17 Requirements in Kenya

To comply with IFRS 17 – Insurance Contracts, Kenyan insurers must follow several key steps that ensure accurate and transparent reporting:

IFRS 17 Requirements in Kenya
– Identify and group insurance contracts based on type and risk.
– Estimate future premiums and claims using realistic assumptions.
– Measure liabilities at their present (discounted) value.
– Recognise profit gradually over the policy period through the Contractual Service Margin (CSM).
– Upgrade systems and tools — especially actuarial and accounting software — to handle the new calculations.
– Disclose detailed notes in financial statements for greater transparency.

In Kenya, Insurance compliance is jointly overseen by the Insurance Regulatory Authority (IRA) and the Institute of Certified Public Accountants of Kenya (ICPAK).

Who Is Eligible and Who Is Exempt from IFRS 17 in Kenya

Category	Description
Eligible (Must Comply)	– All licensed insurance and reinsurance companies in Kenya — including Britam Holdings, Jubilee Holdings, CIC Group, ICEA Lion, Sanlam Kenya, and Kenya Re.
Exempt (Not Required to Apply IFRS 17)	– Insurance agents, brokers, SACCOs, and non-insurance financial institutions. – These are instead governed by IFRS 9 (Financial Instruments) or IFRS 15 (Revenue from Contracts with Customers).
– Reinsurance held – when a Kenyan insurer transfers risk to a global reinsurer like Swiss Re or Munich Re	– Financial guarantee contracts – handled under IFRS 9 (Financial Instruments)

In summary:

If your business issues or manages insurance contracts directly, IFRS 17 applies.
If you only sell or facilitate insurance (like an agent or broker), it doesn’t.

IFRS 17 Adoption in Kenya

Between 2020 and 2023, Kenyan insurers went through a major transition to align with the new IFRS 17 – Insurance Contracts standard.

During this period, most insurers focused on:

Upgrading actuarial systems and data models to meet IFRS 17’s complex measurement requirements.
Training finance and actuarial teams on the new reporting approach.
Running “parallel reports” — comparing results under both IFRS 4 and IFRS 17 to understand the impact.

By early 2023, major insurers such as Jubilee Holdings, Britam, and CIC Group had successfully transitioned, supported by the Insurance Regulatory Authority (IRA), ICPAK, and several consulting and audit firms.

In short:

The adoption of IFRS 17 in Kenya marks a big step toward international best practice and greater transparency in the insurance sector.

Challenges Facing Implementation of IFRS 17 in Kenya

Kenyan insurers have made huge progress adopting IFRS 17 – Insurance Contracts, but the journey hasn’t been without challenges:

High Implementation Costs: Upgrading actuarial and reporting systems required major investments.
Data Gaps: Many insurers struggled with incomplete or inconsistent historical data.
Skills Shortage: There are still few local experts trained in IFRS 17 modelling and analysis.
Collaboration Hurdles: Finance and actuarial teams had to learn to work more closely than ever before.
Complex Calculations: Estimating and discounting future cash flows is highly technical and time-consuming.

Despite these hurdles, Kenyan insurers view IFRS 17 as a long-term gain — promoting stronger accountability, transparency, and investor confidence across the industry.

Struggling with complex actuarial models or incomplete data? You’re not alone.

Mugo & Co. can help you interpret and apply IFRS 17 confidently in your business

Request your FREE IFRS Consultation with Mugo & Co today

FAQs on IFRS 17 in Kenya

1. What is IFRS 17 – Insurance Contracts in simple terms?

IFRS 17 is a global accounting standard that defines how Kenyan insurers should record, measure, and report insurance contracts — in a consistent and transparent way.

2. Is IFRS 17 in Kenya mandatory?

Yes. Since 1 January 2023, all licensed insurers and reinsurers in Kenya must comply, under the oversight of the Insurance Regulatory Authority (IRA) and ICPAK.

3. Is IFRS 17 difficult to implement?

It can be complex, especially for smaller insurers, but it’s manageable with proper systems, actuarial models, and professional support.

4. What’s the difference between IFRS 4 and IFRS 17 in Kenya?

IFRS 4 – Insurance Contracts: A temporary standard introduced in 2004 that allowed insurers to keep using their local accounting policies, leading to inconsistencies across companies.
IFRS 17 – Insurance Contracts: The new global standard that replaces IFRS 4, creating one consistent and transparent model for all insurers worldwide.

Read our simplified guide to understand more about IFRS 4 in Kenya.

5. What’s the difference between IFRS 16 and IFRS 17 in Kenya?

IFRS 16 – Leases: Explains how businesses should account for rented assets such as offices, vehicles, or machinery — treating them as both an asset and a liability.
IFRS 17 – Insurance Contracts: Focuses on how insurers record and report insurance policies and risk exposures.

For a simple breakdown of lease accounting, check out our beginner’s guide to IFRS 16 in Kenya.

Myth vs Fact – Clearing Common Misconceptions about IFRS 17 in Kenya

Myth	Fact
“IFRS 17 only matters for accountants.”	Not true. – IFRS 17 affects everyone — from CEOs and boards to investors and regulators — because it changes how profitability, claims, and risks are reported.
“Only large insurers must apply IFRS 17 in Kenya.”	False. – All licensed insurers, whether large or small, must comply. Smaller insurers can use the simplified Premium Allocation Approach (PAA) for short-term policies.
“IFRS 17 is only about reporting.”	Incorrect. – Beyond financial reporting, IFRS 17 helps insurers improve pricing, risk management, and business planning through better data and insights.