This study examines the determinants of demand for insurance services in the matatu industry in Kenya, focusing on 2NK Sacco as the case study. Price, poor perception, risk and inflation are the major determinant of demand for insurance in the matatu industry. The research design that this study utilized is descriptive method. Simple random sampling technique will be used for the study since the study intends to give every member of the target population an equal chance of being selected. Data used was primary data and the method of data collection was by use of questionnaires. The data was analyzed both quantitatively and qualitatively. Regression analysis was used to examine how the dependent variable is affected by the independent variables. The results of data analysis were presented in frequency tables, charts and graphs. The results show that price has a far greater effect on matatu insurance demand. Moreover, the results reveal that the purchase of matatu insurance is significantly and positively related to age, lack of awareness, inflation and poor perception towards insurance, in addition to providing strong evidence of a negative relationship with education. The insurance companies should try to come up with insurance packages that are fairly priced to ensure that every motorist can afford a comprehensive cover. In addition, premium can be reviewed using actuarial pricing system which makes reckless drivers to pay more and careful drivers to pay less through pooling of risk. Insurance companies should commence the assessment of individual insurance score to rate drivers for payment of premium.

University of Nairobi, Kenya