Why underwriting is shifting as risk grows more complex

Multiple data sources now allow underwriters to evaluate exposures in near real time and identify emerging threats earlier. [Courtesy]

Kenya entered 2026 with cautious optimism. Yet this progress is unfolding alongside a risk environment that is becoming more volatile, interconnected, and harder to predict.

Climate shocks are more frequent, cyber incidents more disruptive, and regulatory and litigation pressures more exacting. Political uncertainty continues to influence operating conditions, while expectations around data protection and governance are rising. In this context, underwriting based primarily on historical loss experience is proving increasingly inadequate.

The most significant shift in underwriting today is not simply better pricing or new data sources. It is the move from a reactive, backward-looking function to a predictive discipline, one that anticipates emerging risks and helps businesses build resilience before disruption occurs.

Underwriters are not abandoning historical data. However, history alone no longer captures the pace, scale, or interconnected nature of today’s risks. The focus has shifted to predictive assessment, where foresight, judgement, and early intervention matter as much as pricing accuracy.

Climate risk illustrates this shift clearly. More frequent floods, prolonged droughts, and extreme weather events are reshaping loss patterns across agriculture, manufacturing, logistics, and real estate. Underwriters are increasingly relying more on predictive models, satellite data, and scenario analysis to assess exposure and accumulation.

Facilities located in high-risk zones face closer scrutiny, while demonstrated mitigation measures now materially influence underwriting terms. Climate risk has moved from the margins of underwriting decisions to their centre.

Advances in data analytics and artificial intelligence are also reshaping how risk is assessed. Multiple data sources now allow underwriters to evaluate exposures in near real time and identify emerging threats earlier. These tools do not replace judgment. Models are only as reliable as the data and assumptions behind them, making governance, transparency, and local context essential parts of the underwriting process.

Regulatory pressure and data protection requirements further raise the bar. For underwriters, this means greater discipline and selectivity. Data protection failures or weak governance structures now carry underwriting consequences beyond compliance considerations.

Cyber risk has perhaps seen the most dramatic shift in perception. As businesses digitise operations and regulatory scrutiny intensifies, cyber incidents pose significant financial and reputational threats. Underwriting cyber risk now demands a clear understanding of systems, controls, and response readiness. This is a board-level issue, not a technical one.

Across all these risk categories, the common thread is anticipation. Underwriting decisions increasingly reflect how well a business understands its exposures and how proactively it manages them.

This shift toward predictive underwriting has important implications for businesses. Insurability is no longer determined only by sector or size, but by risk behaviour. Businesses that engage early, share information openly, and invest in mitigation are better positioned to secure appropriate cover and stable terms.

Insurance is becoming part of strategic planning rather than a last-minute procurement exercise. Clients are expected to demonstrate awareness of climate exposure, cyber readiness, governance strength, and regulatory obligations. Where these elements are in place, underwriters are more willing to support clients through volatile periods.

Conversely, organisations that approach insurance reactively may face tighter terms or limited capacity. The message from underwriters is not one of withdrawal, but of shared responsibility. Strong underwriting outcomes increasingly depend on collaboration rather than transaction.

Distribution models are also influencing underwriting outcomes. Kenya’s growing bancassurance ecosystem provides insurers with deeper customer insight, more predictable demand, and better data. Distribution is no longer separate from underwriting; it is part of the same strategic equation.

As risk becomes more complex, underwriting is reclaiming its role as the backbone of sustainable insurance. Businesses are becoming more analytical, more forward-looking, and more closely aligned with it.

From Old Mutual’s perspective, insurance works best when it supports clients before risk materialises, not only after a loss occurs. Strong underwriting is not about saying no more often. It is about asking better questions, offering clearer insights, and building partnerships that can withstand uncertainty.

As volatility becomes more commonplace, forward-looking underwriting will determine which insurers and businesses are positioned to thrive, and which are exposed to risks they could have anticipated but did not.

- The writer is General Manager, Reinsurance and Underwriting, Old Mutual General Insurance Kenya