Effect of Insurance Penetration Strategies on Financial Performance of Insurance Companies in Kenya
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Date
2024
Authors
Journal Title
Journal ISSN
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Publisher
Daystar University, School of Business and Economics
Abstract
Insurance is vital in an economy from its role in cushioning economies against major risks thus ensuring stability and boosting investor confidence. Based on this, there is need to study on the specific strategies to boost insurance penetration by mitigating against known barriers to insurance uptake in such economies and the impact this has on financial performance of insurance companies. These strategies to boost insurance penetration are referred to as insurance penetration strategies. The purpose of the study was to evaluate the effect of insurance penetration strategies on financial performance of insurance companies in Kenya. The specific objectives were to investigate the extent of usage of penetration strategies by insurance companies in Kenya; to determine the financial performance of insurance companies in Kenya and to determine the effect of the penetration strategies on financial performance of insurance companies in Kenya. The study is anchored on Scenario Thinking Theory which gives a link between the strategies and the barriers to insurance uptake they seek to mitigate against. This is supported by Marketing Theory and Innovation Theory that breaks down the broad strategies into specific strategies for analysis. The data was collected from managers of the targeted 58 insurance companies in Kenya as identified by IRA. For manageability, the study used simple random sampling to have a total of 188 respondents. For data collection, structured questionnaires were used. This was administered via Google forms to allow more effective data collection. Secondary data on the other hand was obtained from IRA industry report for the year 2023/2024. The data collected was first analyzed for measures of central tendency followed by a regression analysis due to the existence of multiple independent variables against a single dependent variable. To ensure adherence to ethics, the researcher sought authorization from DU-ISERC and NACOSTI which involved submission of the research proposal and data collection instruments for scrutiny on adherence to ethical standards. Additionally, the data collection instruments were anonymous with the respondents not disclosing any information that would identify them. The study found a high impact of digitization, Product packaging and pricing strategy on insurance penetration, profitability and capital efficiency thus high impact on financial performance of insurance companies. The study additionally found that that improved internal efficiency such as digitization and product packaging have a higher impact on financial performance of insurance companies as opposed to strategies that concentrated on customer base expansion such as pricing strategy. The study therefore recommends for a paradigm shift to focus more on internal efficiency enhancing strategies. The researcher further recommends for researchers to use integrated approach to measuring performance instead of using a single indicator such as penetration or profitability which are the most commonly used by the previous studies. This is because an integrated approach is more comprehensive.
Description
MASTER OF BUSINESS ADMINISTRATION in Strategic Management
Keywords
Financial performance, Insurance penetration strategies, Marketing Theory and Innovation Theory
Citation
Ndunge, M. F. (2024). Effect of Insurance Penetration Strategies on Financial Performance of Insurance Companies in Kenya. Daystar University, School of Business and Economics