Effect of adopting risk based supervision on financial performance of insurance companies in Kenya
The purpose of this study was to trace the effect of the adoption of risk based supervision on financial performance of insurance companies in Kenya. The target population of the study constituted of 47 respondents who were risk and compliance managers, internal auditors, finance managers and accountants at insurance companies in Kenya. The study administered questionnaires which included structured and unstructured questions to all the respondents since it was the most appropriate tool to gather information. Descriptive statistics such as mean, standard deviation and frequency distribution were used to analyze the data. Data presentation was done by the use of pie charts and tables for ease of understanding and interpretation. The study showed that risk based supervision affected total premium collected in the insurance companies where majority of the insurance company’s highlighted changes in premium collected. Total claims also were affected by the new risk based approach while growth of new policy holders was also influenced. Adoption of risk based supervision in an insurance company enables it to detect risks on time and concentrate on high risk areas leading to increased transparency and accountability, hence enhancing financial performance. The study recommends that management in insurance companies should ensure effective risk management through proper risk assessment; training staff on risk based supervision and ensure that risk based supervision standards are achieved and maintained.