FACTORS INFLUENCING THE LOW PENETRATION OF INSURANCE SERVICES IN AFRICA
DOI:
https://doi.org/10.47604/jdcs.1598Keywords:
Penetration of Insurance Services, Insurance, Economic ExpansionAbstract
Purpose: This research factors influencing the low penetration of insurance services in Africa.
Findings: Insurance promotes economic growth by increasing the amount of money that people save, lowering the amount of money that people save for unnecessary precautions, and turning idle capital into active capital by reducing the amount of risk that companies and individuals in different parts of the economy are exposed to. The extent to which a country's markets participate in insurance shows the extent to which such markets are able to accept insurance as both a strategy for risk reduction and a source of investment. A low insurance market penetration rate is indicative of a slower rate of economic expansion. As a consequence of this, the objective of this research is to determine the elements that contribute to the low level of insurance services that are utilized in Africa. Lack of means, mistrust of financial service providers, unwillingness of multinational insurance firms to invest in Africa, lack of reliable information, poor legal and judicial systems, lack of human capital and expertise, shallow financial markets, and failure by communities to embrace formal insurance services are some of the reasons behind low insurance penetration on the Africa continent. According to the findings of the study, there is a significant connection between the criteria indicated and the level of insurance services penetration in Africa.
Unique contribution of Theory, Practice and Policy: According to the findings of the study, insurance companies should offer individualized services and products that combine protection against risk with opportunities for financial gain. The report also suggests that various stakeholders work together to ensure the adoption of measures that would address the numerous variables that were identified as being the cause of low insurance penetration. This recommendation was included in the study.
Downloads
References
Association of Kenya Insurers (AKI). (2018). Insurance Industry Annual Report. Nairobi: Association of Kenya Insurers (AKI).
Coulibaly, S. S. (2021). A study of the factors affecting mobile money penetration rates in the West African Economic and Monetary Union (WAEMU) compared with East Africa. Financial Innovation, 7(1), 1-26.
Dayour, F., Adongo, C. A., & Kimbu, A. N. (2020). Insurance uptake among small and medium-sized tourism and hospitality enterprises in a resource-scarce environment. Tourism management perspectives, 34, 100674.
Deyganto, K. O., & Alemu, A. A. (2019). Factors affecting financial performance of insurance companies operating in Hawassa city administration, Ethiopia. Universal Journal of Accounting and Finance, 7(1), 1-10.
Din, S. M., Angappan, R., & Baker, A. A. (2017). Insurance effect on economic growth among economies in various phases of development. Review of International Business and Strategy, 27(4), 409-427.
Emamgholipour, S., Arab, M., & Mohajerzadeh, Z. (2017). Life insurance demand: middle East and North Africa. International Journal of Social Economics.
Guan, L. P., Yusuf, D. H. M., & Ghani, M. R. A. (2020). Factors influencing customer purchase intention towards insurance products. International Journal of Business and Management, 4(5), 70-79.
Insurance Regulatory Authority, IRA, (2019). An assessment of staff skills and competency levels in insurance companies in Kenya.
Kange'the, M. M. (2019). Factors affecting insurance penetration in Kenya - an insurance agents' view (Thesis, Strathmore University). Retrieved from http://suplus.strathmore.edu/handle/11071/6690
KPMG (2019). Sector Report: Insurance in Africa. Geneva: KPMG. economies. The Geneva Papers on Risk and Insurance-Issues and Practice, 35(1), 130-160.
Luvisia, S. L., & Nzulwa, J. Factors influencing penetration rate of general insurance services in Nairobi, Kenya.
Mburu, J. M. (2017). Penetration and Uptake of Insurance in Kenya: A Case of Shopping Malls in Nairobi County, Kenya (Doctoral dissertation, United States International University-Africa).
Ndurukia, Z., Njeru, A. W., & Waiganjo, E. (2017). Factors influencing demand for micro insurance services in the insurance industry in Kenya. International Journal of Academic Research in Business and Social Sciences, 7(7), 232-259.
Odenyo, K. O. (2018). Factors affecting micro insurance penetration in Kenya (Doctoral dissertation, United States International University-Africa).
Organization for Economic Co-operation and Development (OECD). (2017). Global Insurance Market Trends 2021. Paris: Organization for Economic Co-operation and Development (OECD).
Otedo, S. O. (2017). Insurance Employees Perception on the Challenges Affecting Performance of Insurance Companies in Kenya (Doctoral dissertation, University of Nairobi).
Price Waterhouse Coopers, (2018). Insurance industry analysis. Johannesburg: Price Waterhouse Coopers, South Africa.
Srijanani, D., & Rao, R. S. (2019). An analysis of factors affecting the performance of general insurance companies in India. Gavesana Journal of Management, 11(1), 9-16.
Tesfaye, T. T. (2018). Analysis of factors affecting financial performance evidence from selected Ethiopian insurance companies. International journal of science and research, 7(12), 834-852.
Tsvetkova, L., Bugaev, Y., Belousova, T., & Zhukova, O. (2021). Factors affecting the performance of insurance companies in Russian federation. Montenegrin Journal of Economics, 17(1), 209-218.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Dr. Ben Kajwang PhD
This work is licensed under a Creative Commons Attribution 4.0 International 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.