Corporate governance and organisational performance of insurance companies in Kenya

Abstract

Corporate Governance provides a structure through which the objectives of the companies are set, ways of attaining those objectives and monitoring the performance are determined. This study sought to find out the effect of corporate governance on the performance of the Insurance companies in Kenya. The study intended to find out if corporate governance structures, practices, principles and pillars have an effect on the performance of the Insurance companies in Kenya. The research design for the study was cross sectional descriptive research design. Data was gathered using structured questionnaires and analyzed using descriptive and inferential statistics. The results indicate that the insurance companies in Kenya have in place corporate governance practices and structures and their activities are anchored on corporate governance pillars and principles. Independently, corporate governance structures have a positive relationship with performance of Insurance companies; it contributes greatly in the learning and growth performance and the financial performance of the Insurance companies respectively. The results further indicate that there is no relationship between financial performance and the corporate governance principles; however there is a positive relationship between the principles and customer performance, internal business performance and learning and growth performance measurements. The Pillars of corporate governance have a positive relationship with financial performance, customer performance, internal business process performance and learning and growth performance. However the relationship is statistically insignificant. Corporate governance practices have a weak but positive relationship with the organizational performance, that is, financial performance, Customer performance, internal business process performance and learning and growth performance. It however contributes highly in financial performance and customer performance. The study indicate that the combination of good corporate governance structures, principles and pillars have a positive and statistically significant relationship with the performance of insurance companies in Kenya. However if corporate governance practices are added to the three constructs, corporate governance therefore becomes irrelevant to the performance of insurance companies. The study thus concludes that corporate governance is relevant to the performance when corporate governance structures, pillars and principles in the insurance companies. The recommendation of the study is that corporate governance dimensions to be strengthened in the insurance companies so as to positively influence the performance of these studies. Further studies should be conducted on a specific insurance company to establish if corporate governance has a significant influence on the performance of the company. Future researchers also need to have ample time to ensure that they receive feedback from all the insurance companies in Kenya. The recommendations for the study is that insurance companies in Kenya need to strengthen and clearly outline their corporate governance structures, principles, pillars and practices so as to improve the performance