To identify a framework for adoption by insurance industry for enhancing insurance penetration

A Thesis Submitted in Partial fulfillment of the Requirement for the Degree of Masters of Business AdministrationIn the Kenyan vision 2030 economic blueprint, the government has set out clearly the need for a comprehensive access of insurance services for all people in a country regardless of their socio-economic levels. The need to be covered by insurance is essentially higher for people on the lower-end of the income structure as they are prone to a myriad of problems such as illness, unexpected loss of income and vulnerability to a host of misfortunes. Hence, this provokes a need within the business environment to bridge the gap of insurance services inclusion to this group of people who have a dire need for the cover. In the market, insurance industries have been struggling to exert their presence among this group of clients to no substantial gain. It is due to this challenge that this study seeks to propose a framework that if adopted geared towards promotion of better insurance uptake. The research utilized determinants, challenges and strategies as the parameters that will help to measure the insurance penetration. The theoretical background of this study was based on the agency theory, and utility theory. The empirical review was enhanced through an analysis of previous studies on the select topic. This research adopted a cross-sectional study design where data will be collected using structured questionnaires and data analysis conducted using SPSS. The data was presented using tables, charts and bar graphs where possible. Based on previous research findings showed that outlook reports this study will seek to come up with a framework that will enhance insurance penetration. The validation of the framework was carried out with the help of four selected insurance firms. Findings showed that the predictor variables (Determinants, challenges and strategies) were attributed to 72% changes in insurance penetration. The validation of the framework showed that the framework can be utilized by insurance firms towards enhancing insurance penetration. Findings from the research showed that technology, customer awareness, pricing, government intervention, regulatory framework and innovation were the key determinants of insurance penetration. The main challenge to insurance penetration were identified to be poor customer awareness, marketing and distribution channels, lack of government/regulatory support. The majority of the respondents also felt that insurance firms lagged behind in terms of differentiating their products hence constrained customer preference. Findings also showed that the main strategies that can extensively enhance insurance penetration were government involvement, pricing and forming strategic alliances. The researcher recommends that insurance firms should engage the government and the regulator in drafting new laws meant to foster insurance penetration. The study further recommends adoption of new technology that will foster better product innovation, customer handling and better differentiation of products