STRATEGIC ORIENTATION AND PERFORMANCE OF INSURANCE COMPANIES IN NAIROBI CITY COUNTY, KENYA

Abstract

Despite the fact that insurance has been practiced for over a thousand years’ world over, it is still a fact that insurance uptake is still very low, not only in Kenya but the world over. Overall gross premium declined by 0.8% in real terms. Premium growth in the industrialized countries was negative 1.1%. The general objective of this study was to examine the effect of strategic orientation on performance of insurance companies in Nairobi City County, Kenya. Specifically, the study sought to assess the effect of technological innovation on performance of insurance companies in Nairobi City County, Kenya, to determine the effect of product development on performance of insurance companies in Nairobi City County, Kenya, to establish the effect of process innovation on performance of insurance companies in Nairobi City County, Kenya and to assess the effect of market development on performance of insurance companies in Nairobi City County, Kenya. The descriptive research design was employed in this study. This study targeted management employees working in 56 insurance companies in Nairobi City County, Kenya. This implies that the unit of observation was insurance companies in Nairobi City County, Kenya while the unit of observation included 336 management employees working in these companies, top managers, middle level managers and lower level managers. The study’s sample size was reached at using Krejcie and Morgan sample size determination formula. Therefore, using the formula, the sample size for the study was 179 respondents. The respondents were chosen with the help of simple random sampling technique. The study used questionnaires as the tool for data collection. The questionnaire was self-administered using drop-and-pick-up later technique. The questionnaire was piloted to a group of 18 managers who were excluded in the actual study. SPSS (version 22) was applied in analysing quantitative data where descriptive statistics was computed and presentations done in percentages, means, SD and frequencies. Displaying of the information was done in table and figures. Pearson R correlation was used to measure strength and the direction of linear relationship between variables. Multiple regression models were fitted to establish the effect of strategic orientation on performance of insurance companies in Nairobi City County, Kenya. The study concludes that process innovation has a significant effect on performance of insurance companies in Nairobi City County, Kenya. The study also concludes that market development has a significant effect on performance of insurance companies in Nairobi City County, Kenya. Base on the findings, the study recommends that the management of insurance companies should implement blockchain technology for claims processing and fraud prevention. Blockchain offers a secure, transparent, and tamper-proof system for recording transactions, which can streamline the entire claims process by ensuring that all data is accurate and accessible in real-time. The study also recommends that the management of insurance companies should focus on expanding their reach through partnerships with mobile network operators.

Key Words: Strategic Orientation, Process Innovation, Market Development, Performance of Insurance Companies