Operations Management Practices and Performance of Insurance Brokers in Nairobi

Abstract

This research study aimed at establishing the link between the performance of insurance brokers in Nairobi City and Operation Management Practices (OMP). In particular the specific objectives were: i) Determine the extent of the application of the operations management practices by the insurance brokers in Nairobi, ii) Identify the challenges faced by the insurance brokers in Nairobi applying Operations Management Practices and iii) Establish the relationship operations management practices and Performance in insurance brokerage business. The operation management practices contributes immensely on how the firm competes through product and service design, production cost, response time inventory management and supply chain management. An exploratory design was used to identify the extent to which insurance brokers apply OMP and to investigate which OMP are adopted as well to establish the impact of these OMP on the performance of the insurance brokers. The study targeted a population of 53 insurance brokers in Nairobi City and a census was carried out as the population was small to be sampled. The study used questionnaires to collected the necessary data and a total of 45 questionnaires were validly filled and used for the analysis. This was a response rate of 85% which way above the required threshold of 60% by most researchers. The managers surveyed had a minimum of undergraduate degree with 80% and experience of 5 years of 78% within the insurance brokerage firm. The insurance brokers surveyed apply the five OMPs under study but with varying degree. Top on the list machine and equipment maintenance with a mean of 1.8 and standard deviation of 0.75 followed by product and service design with a mean of 2.2 and standard deviation f 0.95 and the rest with a mean more than 2.5. The insurance are faced with several challenges among them lack of documented maintenance programmes with a mean of 1.20 and a standard deviation of 0.45,lack of documented quality management systems with a mean of 1.49 and standard deviation of 0.91 among others. The performance of the insurance firms has improved with the number of claimed increasing over the fours, number of accounts held has also minimally increased and the time taken to settle the claim has reduced over the four year period. There is a linear relationship between the performance of the insurance and the operation management practices. The regression shows that supply chain management practice, machine and equipment maintenance and quality management have a positive relationship while planning and control and product and service design have a negative relationship. The general regression line shows that the equation has an R of 0.55 and all the coefficients are statistically significant at 95% confidence interval. The conclusion is that there is need for the industry to practice these Operation Management Practice as they have an impact and influence on the performance of the insurance broker. The research recommends that the management of the insurance brokers and the regulators should embrace these practices as they enhance the performance of the industry. The research further recommends that a longitudinal study should be carried to establish the link of the variables over time. Further a similar study should be carried out in insurance industry as a whole to establish the link