The Insurance Regulatory Authority on Friday said insurance firms will cover all policy holders affected by the new coronavirus.
Commissioner of Insurance Godfrey Kiptum said the agency was in talks with health insurers and they agreed to cover medical costs of coronavirus victims in the country.
Standard medical insurance typically excludes epidemics and pandemics.
Earlier this week, the World Health Organisation (WHO) declared the disease a pandemic.
Kenya reported its first case of the coronavirus on Friday even as the country remains on high alert in the wake of the disease spreading in 12 African countries.
Health Cabinet Secretary Mutahi Kagwe said the patient is a Kenyan who travelled from US via London.
He said that although the patient, a Kenyan, is stable and eating, she will not be released from hospital until she is confirmed negative. The woman is at Kenyatta National Hospital's Infectious Diseases Unit.
The government says it has traced all contacts the patient made since her arrival.
The Association of Kenya Insurers (AKI) had earlier said the classification of the disease as pandemic indicates that victims will settle their own bills if cases are reported in Kenya.
“If there was to be a major attack, then all insurance companies would close shop. The claims will wipe the insurers out completely. That is why such exclusions are put in insurance policies,” said Tom Gichuhi, the AKI chief executive.
More than 126,000 people have been infected globally by the virus and more than 4,600 have died. The disease has spread to 122 countries, prompting the WHO to label the outbreak a pandemic.
In Kenya, medical insurance remains a loss-making segment due to price undercutting, fraud and high hospital bills. Medical insurers’ underwriting loss doubled to Sh1 billion in 2018.