FACTORS INFLUENCING PERFORMANCE OF INSURANCE INDUSTRY IN KENYA: A CASE OF SMALL AND MEDIUM INSURANCE COMPANIES IN NAIROBI COUNTY
Jane Wambui Ndegwa - Master of Business Administration, Laikipia University, Kenya
Thomas W. Gakobo - Department of Commerce, Laikipia University, Kenya
Samuel Onyuma - Department of Commerce, Laikipia University, Kenya
ABSTRACT
Though insurance sector has been in existence in Kenya since 1880’s the growth of the Industry still remains very slow, Small and Medium Insurance Companies continue to experience declining performance despite the sector being a promising contributor to the economy. Therefore, the purpose of this study was to establish the factors influencing performance of insurance sector in Kenya specifically the small and medium insurance companies within Nairobi county. The specific objectives were to investigate the influence of human capital, establish the role of customer service and the contribution of insurance organisation culture in the performance of the Small and Medium Insurance Companies. The study was based on resource based value theory and customer satisfaction theory. The significance of the study contributed to the policy formulation by the relevant authority bodies and contributed additional information to the existing knowledge and formed a basis for comprehensive research on this area of study. The study adopted the descriptive survey using questionnaires to understand and describe the phenomenon under study. The target population comprised of 3 small and 4 medium insurance privately owned companies with net premium turnover of below kshs.550M, licensed as at 2014 to underwrite General insurance business. A sample of 103 employees was used. Purposive sampling was applied to identify the respondents from each of the Small and Medium Insurance Companies where they selected randomly from each level of management. Pilot study was conducted to pre-test the reliability and validity of the research instruments. Primary data was collected through questionnaires designed with closed ended questions and the secondary data was collected from the published audited accounts by AKI. Data from the questionnaires was processed through editing and coding and then entered the data in the computer for analysis using descriptive statistics with the help of Statistical Package for Social Sciences (SPSS) and the Excel spread sheet. The Descriptive analysis was important since it provided the foundation upon which further studies should be conducted. The qualitative data was analysed through content analysis. For the quantitative data, responses were coded, tallied and their frequencies and percentages identified. For the qualitative data, similar responses were coded and tallied after which deductions were made. In addition advanced statistical techniques (inferential statistics) were used. Regression analysis was used to determine the relationship between the independent and dependent variables. Tables and other graphical presentations as appropriate were used to present the data collected for ease of understanding and analysis.
The findings shows that taking all other independent variables at zero, a unit increase in human capital will lead to an increase in the scores of the performance of insurance industry. The study also established a significant relationship between performance of insurance industry in Kenya and the independent variables; human capital, customer service and organizational culture. The study concludes that the organization ensured that the customer service team had the right skill and competence. On the basis of this study it can be concluded that organizational culture has a positive impact on the employee’s job performance. The study recommends that the companies should come up with some effective plans especially in investing various aspects of human capital so as to attain greater performance and also to ensure firms remain competitive. It is also recommends that since a company or organization must be totally committed to delivering consistently high standards to gain and retain customer loyalty. The study further recommends that the insurance firms should inspire employees with creative energy to enhance their insurance organisational culture that will push the organization forward towards desired goals.
