The Policy Context and Its Effects on Foreign Insurance Companies in Kenya

Abstract

Generally, this study sought to analyse the effects of government policies on foreign insurance companies using Kenya as a case study. The study therefore, examined the links between government policy and investment on insurance industry before analysing the insurance industry, government regulation and policy environment in Kenya thereafter interrogating the effects of government policies on the insurance industry in Kenya and finally concluded with several recommendations to make the insurance industry more profitable. The study also set out one hypotheses namely that there is an inverse relationship between government policies and the growth of an industry. The study relied on both primary and secondary data collection methods and was anchored on ADKAR change management models theory. The study found out that government policies and regulation stand to benefit all the stakeholders in the insurance industry this is as result of a level playground created by these regulations. The study also established that one of the biggest wins from government regulation is customer protection and that through education programs clients have become more enlightened which has resulted to increased uptake of insurance products. The study also found out that premium undercutting has affected the industry negatively due to lack of government regulation on the same this has resulted to stiff market competition as insurance companies are competing to pull customers their way. Finally, the study also found out that when it comes to law making the government tends to come up with clauses that favour major insurance industry players and not all. Lastly, the study has given recommendations which includes enhancing insurance capacity which will address the issues of premium undercutting and encourage fair competition among insurance companies thus increasing insurance uptake. Balanced regulatory approaches to be applied to all stakeholders in the insurance industry irrespective of their purchasing power. The insurance regulatory body to be proactive to ensure that fraud and money laundering is kicked out completely which will in return ensure that premiums collected is clean and review of existing insurance contracts to ensure that they are fair to all stakeholders in the market.