The effect of product pricing on the growth of micro insurance by insurance underwriters in Kenya
This research study sets out to examine whether the growth of microinsurance in Kenya is affected by how insurance underwriters price their products. The research objective was to establish how product pricing affects the growth of microinsurance by insurance underwriters in Kenya. The research adopted an experimental research design and was based on multiple linear regression analysis of secondary data. Data was collected from 7 insurance companies which underwrite microinsurance. The dependent variable used was the gross premium which was a proxy for the growth of microinsurance and the independent variables used were incurred expense ratio, incurred claims ratio and net income ratios which were proxies for product pricing. The coefficient of determination was used to check the fitness of the model. A t-test statistic was used to test the significance at 5%. The findings of this research establish that there exists a relationship between the gross premium and the incurred expense ratio, incurred claims ratio and net income ratios. The study established that there was 87.9% variation in gross premium which could be explained by the independent variable thus deeming the regression model fit. There was a positive correlation between the expense ratio 0.555, claims ratio 0.239 and net income ratio 0.914 and the gross premium, which is significant at 5% implying that an increase in the above ratios will indicate an increase in the gross premium. This doesn’t mean that there is an increase in the earned premiums but simply indicating an increase in the business underwritten. Further research should be done putting into consideration the earned premiums and using the growth ratio as the dependent variable.