The purpose of this study was to examine the influence of identifying adaptive challenges behavior on the digital transformation of insurance firms in Kenya. Guided by the research question on the relationship between identifying adaptive challenges behavior and digital transformation, the study employed an adaptive leadership theoretical framework and a postpositivist philosophical stance. A descriptive correlational research design was adopted, and data were collected from a target population of 392 through a self-administered questionnaire. A sample of 127 supervisors was drawn from the 56 insurance firms listed by the Insurance Regulatory Authority. The ordinal logistic regression results indicated a good model, which explained 59.7% of the variance in digital transformation and significantly predicted digital transformation β2 = -4.787, p ≤ .05. Hence, identifying adaptive challenges behavior has significant influence on the digital transformation of insurance firms in Kenya. The research recommended that identifying adaptive challenges behavior is emphasized in driving digital transformation in the insurance industry.