Role of Private Insurance on Economic Growth in Kenya

Abstract

The study analysed the role of private insurance sector on Economic growth in Kenya. The main aim was to scrutinize the effects of insurance activities on growth in Kenyan economy. Type of data used was time series for the time frame 1980-2017 and estimated a vector error correction model. To measure insurance market activity, total premium volume from all insurance categories (general and life) was used and real GDP for economic growth. The findings of the study are that, total sum of insurance premiums exhibited a notable positive effect on economic growth. Human and physical capital, savings rate, interest rate and life expectancy affect growth of the Economy in the long-run. Human capital and life expectancy showed notable negative influence tor on growth whereas physical capital and interest rate influence economic growth positively. Savings rate show insignificant adverse effects on economic growth. The research recommendation is that the insurance industry to develop custom made products which are appealing to customers. This would increase policy take up and hence increase premiums collected which in turn will steer economic Also the government should create a favourable operation environment for the insurance sector.