The determinants of growth and development of kenya's insurance industry(1974-2004)
Abstract
Kenya's insurance industry has been undergoing extremcly List growth since independence. This
research paper examines the determinants of Kenya's insurance development measured by total premium volume.
Several independent variables such as per capita GDP. the total population. per capita wage. per capita education
expenditure and inflation rate have been examined. Others arc private sector credit b) non-bank financial
institutions. imports. nominal interest rate and imestment in tied assets (gross fixed capital formation). Empirical
studies indicate that some of these factors have determined the development and growth of insurance in other
countries and therefore it is prudent to examine their eflect in our economy as regards insurance development.
Ordinary Least Square estimation is used to estimate the effect of these variables on the growth and development
of insurance in Kenya. This research used secondary data sourced from various statistical reports available from
the Central Bureau of Statistics. and the Commissioner of Insurance's office. The sample period runs from 1974 to
2004. Kenya's extremely fast development of insurance definitely mirrors the characteristics of the national
economy as a whole. The study finds some significant results. PCI'capita GDP, as a measure of wealth for a given
region. proves more significant to the development of insurance. Besides, the variables such as fixed assets
investment (capital formation) and the number of telephones, which are for the first time incorporated as
explanatory variables in empirical investigation, have a significant influcnce on Kenya's insurance growth and
developmcnt. Kenya's insurance sector will keep growing for thc near future mainly owing to her economic development.
Citation
MBA Thesis (University of Nairobi)Publisher
School of Business, University of Nairobi