Abstract:
The use of horizontal alliance among insurance firms creates internal capital markets that substitute for well-developed external capital and corporate debt markets. Furthermore, the risk sharing and pooling activities of the horizontal groups take over some of the functions of a market for corporate control. The objective of this paper was to establish the influence of the co-insurance of large risks of alliance partners on the performance of insurance firms in Kenya. The study used a cross-sectional descriptive survey research design and the target population was 44 insurance firms. Purposive sampling was used to select four respondents from each insurance company that is General Manager in charge of technical Operations, Underwriting Manager, Claims Manager and Marketing Manager giving a sample total of 176 respondents. This study used primary data through administration of self-designed questionnaires. Descriptive statistics conducted were frequencies, percentages, means and standard deviation while inferential statistics consisted of correlation and regression analysis. The findings indicated a strong positive significant linear relationship between co-insurance of large risks and performance of insurance firms. There is therefore a need for insurance firms to reduce premium bills, mitigate the legal costs of litigation and settlement of claims, lower operational expenses owing to shared economies of scale, unravel the technical complexities of large scale projects which is achievable through co-insurance by formation of alliances.
