SOCIO-ECONOMIC FACTORS AND THE PERFORMANCE OF ISLAMIC MICRO-INSURANCE COMPANIES IN KENYA
SOCIO-ECONOMIC FACTORS AND THE PERFORMANCE OF ISLAMIC MICRO-INSURANCE COMPANIES IN KENYA
Abubakar Omar Mohamed - Department of Accounting and Finance, Kenyatta University, Kenya
Dr. Fredrick W. S. Ndede - Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
Performance of Islamic micro insurance companies play an important part in the economic development of the insurance sector and the economy at large by providing insurance services to benefit the low-income part of a given society. However, all these benefits may encounter challenges as a result of social economic factors among other factors. It is on this basis that the current research examined the impact of socio-economic factors on performance of Islamic micro insurance in Kenya. The precise objective of the study was: to ascertain the effects of income level on the performance of Islamic micro insurance in Kenya. The study was anchored using Agency theory, expected utility theory and fundamental cause theory. This study used descriptive survey design. The targeted respondents were 105 respondents comprising of 5 managers and 100 Takaful agents. The study utilized census. The study revealed that income level had a positive and significant effect on the performance of Islamic micro insurance in Kenya. The study concluded that low-income individuals have little access to formal financial services for the management of risks. This research advised Islamic micro insurance operators to offer training to their workers in order to strengthen their human capital base and advance the Takaful agenda in the insurance industry. There is a need for public education on the Islamic micro-insurance options that are now available and how they might help reduce risk. The results of this research were useful for Kenyan insurance firms and policy makers as they enabled them to comprehend and recognize the advantages of micro insurance and how to overcome obstacles caused by socioeconomic variables that impact their performance.
