The Kenyan government has unveiled draft regulations that aim to protect farmers from the escalating impacts of climate change by compelling insurers to settle weather-related claims within 10 days.
The proposal seeks to strengthen trust in agricultural insurance and provide timely support to farmers facing climate-induced losses.
According to a report by Business Daily, the new framework focuses on index-based insurance, also known as parametric insurance.
Unlike traditional insurance, which requires on-the-ground assessment of individual losses, index insurance pays out automatically when a specific environmental threshold, such as rainfall, temperature or wind speed, is triggered.
This significantly shortens the claims process and reduces administrative bottlenecks.
The proposed rules require insurers offering index-based products to ensure policies are fair, transparent and scientifically sound, while adhering to the strict 10-day payout timeline.
The approach is modelled on successful implementations in India, Latin America and the Caribbean, where parametric insurance has helped safeguard farmers against extreme weather shocks.
Weather index insurance was introduced in the early 2000s as a practical solution for smallholder farmers, who often lack access to reliable insurance due to high verification costs and logistical hurdles.
Its relevance has increased as climate change drives more frequent droughts, floods and erratic rainfall patterns, conditions that have heavily affected Kenyan farmers in recent years.
Berber Kramer, a senior research fellow at the International Food Policy Research Institute, welcomed the proposal, noting that delayed payouts have long undermined farmer confidence.
“Delays in insurance payouts have been a real concern for farmers, eroding trust, and sometimes even leading them to not renew their insurance policies,” she said.
“If farmers receive compensation quickly, they can re-invest, sometimes even in the same season.”
Climate-related risks are rising globally, with the World Wide Fund for Nature (WWF) warning that even major economies could become “uninsurable” as natural disasters intensify.
In Africa, where agriculture forms the backbone of most economies, the vulnerability is even more pronounced.
Smallholder farmers often struggle to access credit due to the high risks posed by unpredictable weather and limited financial protection.
Kenya, where agriculture contributes over a quarter of national economic output, has experienced a surge in severe droughts and flooding in the past decade.
Yet fewer than 1% of Kenyan farmers currently have any form of insurance, according to Kenyan Wall Street.
Efforts are underway to expand access. The African Reinsurance Corporation and the International Finance Corporation (IFC) are collaborating to scale up affordable agricultural and climate insurance products for smallholder farmers across the country.
Experts argue that innovative tools such as index insurance will be crucial for protecting livelihoods, but they must be backed by strong regulation and enforcement.
Saliem Fakir, Executive Director of the African Climate Foundation, said more innovation is needed to support underinsured communities.
“Index-based insurance is one of those innovations, but in the end, it depends on the scale and frequency of the climate risk and the financial costs on the insurance industry.”
He warned, however, that reductions in development aid, such as recent cuts by USAID, pose new challenges, as donor support has historically helped subsidise insurance schemes in Africa’s most vulnerable regions.
Despite broad support, experts say the Kenyan government must provide clarity on how the proposed 10-day payout rule will be implemented.
Kramer emphasised that reinsurers, who often play a significant role in payout delays, should also be held accountable.
“For the policy to be effective, reinsurers need to be held accountable too, as they often cause at least some of the hold-up, especially in bad seasons, when farmers need liquidity most,” she said.
If adopted, the new regulation could mark a major milestone in Kenya’s efforts to strengthen climate resilience in agriculture, offering farmers quicker relief, restoring confidence in insurance and enabling faster recovery from weather-related shocks.