The relatively lower level of insurance penetration in Kenya has been attributed to a number of factors including lack of awareness on available insurance products, low income levels among the key consuming public, perceived low rate of returns for life policies, cumbersome claim settlement procedures, lack of trust of insurance players, and expensive premiums. The study objective was to establish the mediating effect of digital transformation on the relationship between strategic leadership and insurance penetration in Kenya. The study was guided by Strategic Leadership Theory, New Public Management (NPM) and Resource-Based Theory. Utilizing a cross-sectional survey design, the research targeted 58 licensed insurance companies in Kenya, employing a census sampling method to survey 232 participants, and data analyzed through descriptive and inferential statistics following a pilot study to refine the questionnaire. The study results revealed a very strong positive correlation (R=0.979) between the predictors (strategic leadership and government regulations) and insurance penetration. This indicates that the combined effect of these factors significantly enhances insurance penetration. Additionally, the R2 value of 0.958 suggests that approximately 95.8% of the variation in insurance penetration can be explained by strategic leadership and government regulation. Both factors, strategic leadership and government regulations, individually contribute to increasing insurance penetration, and their combined interaction further strengthens this effect, demonstrating a substantial influence on the sector’s growth. The analysis also indicates that government regulations moderate the impact of strategic leadership, altering its direct effect on insurance penetration. These findings highlight the importance of considering both leadership and regulatory frameworks together when developing strategies to enhance insurance market penetration. The study recommends that, policymakers and industry leaders in Kenya focus on strengthening both strategic leadership and government regulations to enhance insurance penetration. Efforts should be made to foster effective leadership practices that are responsive to market needs while simultaneously developing and enforcing regulatory frameworks that support industry growth. Given that government regulations moderate the impact of strategic leadership, a coordinated approach that aligns leadership initiatives with regulatory policies will be crucial. This International Journal of Management and Leadership Studies, 2026 Volume 6 Issue 1 268 integrated strategy will help create an enabling environment that maximizes the positive effects of leadership and regulation on expanding insurance coverage across the country..