GOVERNMENT REGULATION AND SUSTAINABILITY OF KENYA'S INSURANCE COMPANIES
DOI:
https://doi.org/10.47604/ijfa.817Keywords:
Government regulation, performance sustainability, insurance companies.Abstract
Purpose: The study investigated government regulation and sustainability of Kenya's insurance companies.
Methodology: The study adopted the positivist research philosophy and employed a descriptive research design. The target population of the study was the 51 insurance companies registered by the Insurance Regulatory Authority (IRA) of Kenya as at 31st December 2016. The study took a proportionate sample of 30 companies from 10 life, 15 general and 5 composite companies. The primary data collection was through a structured questionnaire with closed questions. A pilot study was carried out before questionnaire distribution, which ensured the research instrument validity and reliability, before distribution through both hand delivery and email, followed by a telephone call to the respondents and a research assistant later visiting the respondents to collect the filled questionnaires. The raw data was cleaned, edited, coded and analyzed to generate descriptive statistics of ANOVA and T-test and inferential statistics of mean, standard deviation and frequencies, while secondary data was collected using data collection sheets.
Study Findings: The findings showed that there is a moderating effect of government regulation on drivers of sustainability of insurance companies in Kenya. While there was positive and significant effect of government regulation on capital adequacy, management capability and sensitivity to risk, government regulation had no moderation on asset quality as management of other variables of management quality, capital adequacy and risk sensitivity would address the quality of capital.
Unique Contribution: The study recommends that IRA opens up the RBC measurement tool to bring in sustainability and management indices. Further, IRA should review regulation to support the insurance companies to enhance innovation and customer service delivery, which are key for growth, and sustainability of the various insurance companies in the country.
Downloads
References
Bipartisan Policy Center's Insurance Task Force (2017). Global Insurance Regulatory Issues: Implications for U.S. Policy and Regulation.
Cheng, F. X. & Wang, W. (2012). Research on the Relationship among Government Regulations, Strategy Preference and Manufacturing Performance. Journal of Service Science and Management, pp. 37-43
Cheruiyot, K. S. (2016). Impact of Internet Banking on Financial Performance of Commercial Banks in Kenya. Unpublished Master's Thesis from the University of Nairobi Depository.
Donaldson, L. & Davis, J.H. (1991). Stewardship Theory or Agency Theory: CEO Governance and Stakeholder Returns. Australian Journal of Management, pp. 49-65
Freeman, R.E. (1984). Strategic Management: A Stakeholder Approach. Boston, MA.
Jones, P. Comfort, P. & Hillier, P. (2017). The Sustainable Development Goals and the Financial Services Industry. Athens Journal of Business and Economics, pp. 37-50
Li, Y. (2014). Governance, Regulation and Performance of Non-listed Small Corporations in Australia: a Structural Equation Modelling Approach (Doctoral dissertation, Victoria University).
Liargovas, P. & Skandalis, K. (2008). Factors affecting firms' financial performance. The Case of Greece, University of Peloponnese.
Marwa S.M (2007). Essentials of Risk and Insurance, Nairobi: Jomo Kenyatta Foundation.
Merikas A.G., Merika A.A & Skandalis K. S. (2006). An effective index of management competence (Paper presented at the 15th Annual Conference of European Financial Management Association-EFMA, Madrid).
Mushtaq, M., Ismail, A. & Hanif, R. (2015). Credit Risk, Capital Adequacy and Banks Performance: An Empirical Evidence from Pakistan. International Journal of Financial Management, pp. 27.
Osiemo, J. M. I. (2015). Effects of Risk Management Practices on Financial Performance of Non-Life Insurance Firms Operating in Kisii County, Kenya (Doctoral dissertation, JKUAT).
Sean, R. (2015). In What Ways Does Government Regulation Influence the Insurance Sector?
Downloads
How to Cite
Issue
Section
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
