Or rather Franky assumed that Kaido wasn't human because his other title is "King of the Beasts", it's part of the sentence immediately before Franky says it, and it's an assumption from Franky, not a fact.
Putting aside that Whitebeard's title is the World's Strongest Man as in male, not human, the WSM And WSS titles also overlap in terms of who they apply to, why isn't that a problem but it is with the WSC and WSM titles?
The definition of "生物" is living thing, this isn't debatable, you can't just make the word "apple" mean "paper" when you want to, that's not how language works, Kaido is the strongest creature meaning living thing.