As Kenya’s matatu industry keeps providing important transportation for both cities and rural areas, there is a growing effort to find affordable insurance options that can help the sector. Affordable matatu insurance in Kenya is a challenge to many businessmen in the transport sector.
Matatus are the colourful minibuses that make up more than 70% of public transport in cities like Nairobi, Mombasa, and Kisumu. For a long time, these vehicles have struggled with high insurance costs and poor coverage.
Now, matatu operators and people involved in the industry are looking for new ways to make insurance easier to get. This change could support the many drivers, conductors, and owners who depend on this work.
The matatu sector is a crucial part of Kenya’s informal economy, providing jobs to tens of thousands of young people and transporting millions of passengers each day.
However, because the industry has a high risk of accidents and claims from other people, many insurance companies have hesitated to offer affordable plans.
Right now, only a few companies, like Directline Assurance and Invesco Assurance, dominate the market for matatu insurance. These companies together bring in billions of shillings each year from insurance premiums. Recent data shows that these two companies alone made KSh 5.1 billion from commercial motor insurance for matatus, showing how profitable yet unstable this market can be.
For matatu operators, the cost of insurance can be a heavy burden. Comprehensive insurance, which covers damage to the vehicle, theft, and claims from other people, can be very expensive. This is often too much for small owners who work with very small profit margins.
Third-party insurance is cheaper and required by law in Kenya, but it does not provide much protection, making operators vulnerable in case of accidents.
“Most of us only take third-party insurance to avoid trouble with the police,” said James Musau, a matatu owner in Nairobi. “It’s affordable, but it doesn’t help much when things go wrong.”
As a response to these issues, there are more calls for change. Earlier this year, the Federation of Transport Operators in Kenya, led by Gushen Muchiri, asked for reforms in the insurance sector after a meeting in Narok County.
Muchiri criticised the slow pace of claim payments and accused some insurance companies of taking advantage of operators with unfair rules. “Why should I pay for a liability when I have insurance cover?” he asked, representing the concerns of many in the industry.
Their frustrations were made worse by a 15% increase in premiums in 2016 from Directline and Invesco, leading to a legal battle and highlighting the need for more flexible options.
Best and Affordable Matatu Insurance in Kenya
New companies are stepping in to fill this gap. LGT Insurance Agency, part of Lions of Good Times, has created a daily premium model. This allows operators to pay as little as KSh 305 ($2.95) per day for a 14-seater matatu, KSh 420 ($4.07) for a 25-seater, and KSh 480 ($4.65) for a 28-seater.
Since launching in 2017, this plan has become popular, with LGT reporting over 2,000 operators signing up within weeks of starting.
“Matatu operators work day to day,” said LGT CEO Biwott Tirop. “By evening, they share earnings with drivers and conductors, leaving little for monthly insurance. Daily payments make it easier to manage.”
The plan allows LGT to cover the monthly fees initially and then charge operators in smaller daily payments. This fits well with the industry’s informal nature, where daily earnings—averaging KSh 10,000 for short routes and KSh 20,000 for longer ones—guide financial decisions.
Operators like Mary Wanjiku, who drives a 14-seater on Nairobi’s Rongai route, appreciate this system. “Before, I struggled to save for insurance. Now, I set aside a small amount each day, and it’s covered,” she said.
Despite these improvements, challenges still exist. Invesco Assurance exited the market in 2024 after being placed under statutory management, leaving Directline as the main player, which raises worries about high prices.
Currently, Directline is facing court battles as its owner, media tycoon Samuel Kamau Macharia, seeks to close down and end the company’s operations.
Meanwhile, a new company called Definite Assurance Company Limited, supported by shareholders including SportPesa CEO Ronald Karauri, is set to make a difference in the industry.
Definite was licensed by the Insurance Regulatory Authority (IRA) in December 2024 and is focusing on insurance for commercial matatus, although their exact plans are still unclear. People in the industry hope they will offer better prices and challenge the current situation.
Experts argue that just having cheap insurance isn’t enough—being reliable is also important. “Cheap insurance is useless if claims aren’t paid on time,” said Jane Mwangi, an insurance expert in Nairobi.
She mentioned that tracking devices that monitor driving habits could be very helpful. Some insurers, including Directline, are starting to use this technology to improve their services.
