Risk Mitigation Strategies And Performance Of Insurance Industry In Kenya: A Case Of Motor Insurance Companies

ABSTRACT

Effective risk mitigation strategies are the key to achieve performance in the Motor insurance industry. This involves knowing and analysing risks, making, and reviewing risk handling techniques and checking the progress of these to avoid and/or reduce the impact of risk on the performance of the firm. It is against this background that this Project assessed risk mitigating strategies on performance of motor insurance companies. The study’s general objective was to establish the effects of risk mitigation strategies on performance of insurance industry in Kenya: a case of motor insurance companies. Specifically, the Project focused on the Risk control, risk avoidance, risk transfer and product mix strategies on performance of the insurance industry. The study was anchored on Agency theory which is based on the outreach as a way of mitigating risks. The research used descriptive survey research designs. The target population of this study was the management and the other employees of all the 18 Motor insurance companies, the sample size of the study was54.The sampling procedure was both simple random sampling and purposive sampling. Primary data entailed using of questionnaires. Content validity was ensured by asking questions that are relevant and captured the research objectives, reliability was measured with the help of cronbach’s alpha (α). Descriptive statistics such as means, standard deviation and frequency distribution tables were used to analyse the data. Qualitative data was analyzed using content analysis to generate qualitative report which were presented in a continuous prose. Inferential statistics such as regression and correlation analysis were used to establish the effects of risk mitigation strategies on performance of insurance industry in Kenya, a case of motor insurance companies. Data presentation was done by the use of bar charts and graphs, percentages and frequency tables for ease of understanding and interpretation. The study found out that risk control strategy and performance of regulated motor insurance companies in Kenya are positively and significantly related. The results further indicate that risk avoidance strategy and the performance of regulated motor insurance companies were positively and significantly related. It was further established that product mix strategy and performance of regulated motor insurance companies were positively and significantly related while risk based audit strategy and performance of regulated motor insurance companies were also positively and significantly related. The study concluded that risk controlling strategy, risk avoidance strategy, risk based audit strategy and product mix Strategy have a positive and significant effect on performance of Motor Insurance Companies. Based on the findings and conclusions that risk controlling, risk avoidance Strategy, risk based audit strategy and product mix strategy has a positive and significant effect on performance of Motor Insurance Companies, the study recommends motor insurance companies should work toward investing more on risk reduction strategies in order to improve their performance.