Market Penetration Challenges by Insurance Companies in Kenya

A Research Report by Turayishimye Thierry Ayishashe, Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirement for the Degree of Masters in Business Administration (MBA).The main objective of the study was to establish the market penetration challenges for insurance companies in Kenya. The study was guided by the following objectives: to find out the internal organizational challenges that affect market penetration by insurance companies, to establish the external challenges that affect market penetration by insurance companies and to establish if attitude and buying behavior of the target customers contribute to market challenges by insurance companies. In order to achieve the above, the study adopted a descriptive research design to obtain the necessary data. Descriptive research design facilitated the collection of the primary data as a way of getting into the research objectives. The target population of this study was all 44 licensed insurance companies in Kenya, operating in three levels namely Global, Regional and Local. The sample size of the study was of 150 respondents. These included 30 agents, 100 customers and 20 employees from the four insurance companies. The collection of the primary data was done using structured questionnaires that were pilot tested in order to ensure that there was reliability as well as validity. The coding of the data was done with the use of Microsoft Excel as well as SPSS in order to generate the descriptive statistics for instance frequencies and percentages. The presentation of the results was in form of figures, tables as well as cross tabulations. The study established that internal factors within an organization indeed play a key role in penetration of markets by insurance products. The study revealed that a majority of the respondents, 70 percent felt that internal factors do influence the market penetration of insurance products to a large extent, market approach, (70 percent large extent), fund managers experience, (70 percent), internal business processes, (75 percent), fund size, (81percent), customer care practice (78 percent), client communication (78 percent), all influence affect market penetration by insurance companies. The findings on the external organization factors that influence market penetration by insurance companies revealed that government policy, (83 percent) industry dynamics, (80percent), market forces (77 percent), competition (85 percent), power of buyers and suppliers (80 percent), and threat of new entrants 80 percent, all influence market penetration to a large extent. The study also showed that the attitude and buying behavior of the target customers contribute to market challenges by insurance companies revealed that there are six attributes that are equally important with regards to the attitude and buyer behavior, that is: overall affordability, quality and brand name, friendly staff, physical and socio-cultural settings, safety and security. The study concludes that indeed there exists certain internal challenges within insurance companies in Kenya that affect market penetration of the products to the consumers. More specific the product offering, market approach, and fund managers experience, internal business processes, fund size, customer care practice, client communication all influence market penetration. The study also concludes that there are also external organization factors that influence market penetration of insurance in Kenya. Some of the factors include government policy, industry dynamics, market forces, competition, power of buyers and suppliers, and threat of new entrants, all influence market penetration of insurance in Kenya. Consumer attitude and buying behavior also contribute to market penetration challenges faced by insurance companies. The study recommends that management should control the internal organizational challenges which vary from organization to organization. This therefore means that each organization has an opportunity to acquire and thereby maintain a competitive advantage if they properly maximize on the internal organization capabilities. The study therefore also recommends that external factors and consumers attitude should be monitored in order to facilitate market penetration of the insurance products. Organizations should also maximize on their strengths and capabilities in order to enhance market penetration in Kenya