Competitive Strategies Used by Aar Insurance Kenya Limited in Coping With Challenges of Competition in the Insurance Industry in Kenya

Abstract

Competitive advantage is achieved by the ability of a firm to create value for its buyers which should be more than the cost that is put in when creating it. Superior value stems from either offering low prices that offsets the foregone benefits offered by the competitors or by offering the unique attributes that would enable the firm to charge premium prices. Insurance industries world over play a crucial role in the economic development of every nation by cushioning individuals, organizations and governments against unforeseen risk thereby contributing a great deal to a Country’s GDP. In the last two decades, a lot has changed in the Insurance industry in Kenya. These include the industry growth, emergency of new players, collapse and mergers of some players and concerted efforts by the government to enhance regulation especially competition, harmonize products dispensation and protect the consumers of the insurance products. These changes have created a very turbulent environment that has forced many players to change their strategies and focus in order to remain in business. The objective of this study was to establish how one of the players in the industry has been able to overcome the various challenges and remain in business for a period of more than three decades at a period in which some players have pulled out of the market or scaled down. The research was conducted in form of a case study in which long serving employees were interviewed through a questionnaire. The data collected was combined with other information collected from the organization website, publications and also the IRA website and analysed qualitatively. The research was able to establish among other findings that some organizations have opted to merge with other players for synergies while others would shy away from some insurance products and services or close shop altogether. Others like AAR have chosen to diversify and innovate on new products and services in order to attract and retain policyholders while rewarding them with no-claim discounts depending on their claims history. These strategies among others have ensured it remains competitive in the market and stay ahead of some major competitors especially in terms of growth, client’s retention and profitability and the recommendation is for the company to continue innovating on products as it focus on strategies on claims control and clients retention since these strategies are working. Even though the findings on the research were sufficient to draw a conclusion, time factor could not allow the researcher to gather more information with a larger group of employees especially outside Kenya. In this case, further research should be undertaken on the role of strategy in the growth of AAR in the East African region and how it relates with the strategies applied by other players in the region.