Risk management practices and marine premium growth of insurance firms in Kenya
Wakwoba, Musungu A
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An effective program of risk management is an ongoing process of assessment, intervention and fallback planning. The study sought to establish the relationship between risk management and the premium growth of firms in the marine class of insurance in Kenya. The study adopted a cross-sectional survey research design and was guided by the following objectives; to examine the risk management practices employed by marine insurance firms in Kenya; and to establish the relationship between the adoption of risk management practices and premium growth in Kenya‟s marine insurance market. The population of the study consisted of all 34 insurance companies underwriting marine class of business and operating in Kenya. A multivariate regression model was then used to analyze the relationship between risk management and premium growth. The outcome of the study established a significant positive relationship between risk management and premium growth. The study concludes that loss financing, risk avoidance and loss prevention and control constitutes the three main categories of risk management practices adopted by firms in the marine class of insurance with risk management practices associated with loss prevention and control being the most influential risk management practices implemented by insurance firms in the marine class of insurance in Kenya. The study recommends that local firms embrace risk management approaches given the fact that risk management constitutes a major competitive strategy in dynamic market conditions considering that a substantial number of firms in the marine class of insurance lack a risk management framework. The study recommends further research to focus on all classes of insurance to enable an overview of the relationship between premium growth and risk management. The fact that the degree to which various risk management practices affect premium growth of firms in marine class of insurance varies from one firm to the other necessitates further research to identify optimal risk management practices and the possibility of setting benchmarks in Kenya.