Strategic responses to challenges of insurance regulation in Kenya by the Insurance Regulatory Authority
The Insurance sector in Kenya has stagnated over the years and is characterized by closure of insurance companies especially those underwriting public service vehicle business This is due to their inability to meet financial obligations to the policyholders and other insurance beneficiaries. Lack of awareness by the public about the benefits of insurance and the negative perception of the industry has contributed to the low level of insurance penetration. The study was conducted usmg a case study research design based on Insurance Regulatory Authority ( IRA) . The study aimed at establishing the strategic responses undertaken by the Authority in responding to the challenges of insurance regulation. A sample size of seven ( 7) respondents was targeted consisting of Managers, Assistant Managers and senior officers of the Authority. The main findings of the study showed that IRA has put in place strategies to address the challenges and position itself to the regulatory regime. The challenges include high risk associated with insuring Public Service Vehicles (PSV), poor corporate governance, inadequate legal and regulatory framework, inadequate institutional capacity inadequate ICT infrastructure and insufficient capital base. The strategic responses adopted include review of the Insurance Act Cap 487 of Laws of Kenya, divestment on shareholding of insurance companies limiting ownership to 25%, enforcing the capital base requirement, training on good corporate governance as well as conducting frequent onsite inspections to ensure compliance with the Insurance Act. In view of these findings , recommendations for management would be to build capacity by recruiting qualified staff, conduct a Training Need Assessment to align staff training with the quality objectives identified, increase public awareness campaigns on benefits of insurance as well as existence and role of IRA.