Factors affecting uptake of life insurance in Kenya
Life insurance is an important aspect of the social-economoic development of the society. It helps to safeguard the future while also ensure some savings that can be used in a later date. Despite its importance, the penetration of life insurance is currently only at 1.3% in Kenya. This is very low compared to the developed countries where life insurance penetration is quite high. Life insurance in Kenya is regulated by Insurance Regulatory Authority. This is a statutory government agency established under the Insurance Act (Amendment) 2006, CAP 487 of the Laws of Kenya to regulate, supervise and develop the insurance industry. In terms of ethical and prudent business practices in the industry, this is largely overseen by the Association of Kenya Insurers (AKI). AKI is an umbrella body bringing all insurance companies in Kenya together. These two bodies have worked tirelessly in conjunction with life insurance companies to increase the penetration of life insurance in Kenya. Despite their efforts, the penetration remains dismally low. This study therefore sought to establish the factors that affect the uptake of life insurance in Kenya. The population constituted all registered 13 life insurance companies in Kenya. From each company, there were three different types of respondents; customers, sales agents and customer service staff. In all these respondents, only those who had been with the respective companies for more than three years were considered because they have a good understanding of life insurance. The study adopted a descriptive and cross-sectional survey research design as the most appropriate for this study. From all respondent groups, the study revealed that most customers prefer life insurance products with both risk and saving components. From the customer service staff respondents, the study revealed that most life insurance companies live in urban areas and not rural areas. From the agents respondent group, the study revealed that most customers prefer to pay their premiums through mobile money, especially mpesa because of the convenience that comes with mobile money. From the customers‟ respondent group, the study revealed that most customers with life insurance policies were living way above the poverty line with monthly net incomes of above Ksh 35,000. They also indicated that they preferred paying their premiums via mobile money and were referred by a friend to the company. From all respondent groups, the study revealed that high cost of premiums and inefficiency in claims settlement are the major factors hindering the penetration of life insurance in Kenya. Other major factors affecting penetration of life insurance include poor customer service, the complicated nature of life insurance products, poor sales agents integrity and lack of disposable income for most Kenyans. The study recommends that insurance companies should push and market policies that provide for both risk coverage and savings component because that what the customers prefer. The insurance companies should also consider lowering the cost of premiums, have efficient claims settlement processes, improve on agents integrity, improve on customer service, develop new product varieties and increase their presence have country wide presence to improve uptake in rural Kenya.