Factors affecting insurance penetration in Kenya - an insurance agents’ view

A Thesis submitted in partial fulfillment of the requirements for the award of the Degree of Masters of Business Administration at Strathmore University Business SchoolInsurance is a critical component of any country’s economic system. Insurance penetration is one of the measures of relative importance of the insurance sector to the specific country. Insurance penetration in Kenya has been very low at below three percent irrespective of the significant focus by regulators, policymakers and the insurance industry players. The factors impacting insurance penetration in Kenya have been studied over the years. While various studies have been carried out focusing on the corporate insurance industry players, this study sought to investigate the factors affecting insurance penetration in Kenya from the view of insurance agents who intermediate insurance products to the masses. The study conceptualized these factors as national culture, customer service, regulatory environment and public awareness. The specific objectives focused on examining how national culture, customer service, regulatory environment and public awareness impact insurance penetration in Kenya from the view of registered insurance agents. The theoretical perspective of the study was consistent with the Hofstede five dimensions of national culture, the service qualify model of measuring and capturing service quality and the agency model which defines the relationship between principals and agents. The methodology involved a descriptive approach in a cross-sectional study. The population for the study was the insurance agents approved by the Insurance Regulatory Authority (IRA). A sample of insurance agents was targeted and data was collected using a questionnaire administered manually at the insurance agents’ meetings at their branches in the respective insurance companies. The data was then presented using tables. The study achieved a response rate of seventy one percent. The study revealed that regulatory environment, public awareness, customer service and national culture impact insurance penetration in Kenya to a marginal extent of just above one percent. Only two of the independent variables (public awareness and customer service) had a significant impact on the dependent variable, insurance penetration. The study concluded that there are other factors which impact the remainder of insurance penetration in Kenya. Other factors should be considered in future research to establish their effects on insurance penetratio