Department of Accounting and Finance
Permanent URI for this collectionhttps://koha2.tukenya.ac.ke/handle/123456789/922
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Item IMPACT OF PROVISIONS OF LEGAL NOTICE NUMBER 161 OF 2003 ON THE UNDERWRITING AND CLAIMS PROCESSING BY PSV INSURERS IN KENYA(International Journal of Economics, Commerce and Management, 2022-12-12) Ramadhan, ZainabuThe purpose of the study was to determine the impact of Legal Notice Number 161 of 2003 popularly known as the “michuki” rules with respect to Kenyan PSV insurer’s underwriting and claims processing. The study focused on ‘Matatus’ where there was little enforcement and compliance of the law prior to the introduction of the legal notice. In 2003, the new NARC government introduced reforms to PSV operation through Legal Notice 161 whose aim was to reduce PSV related accidents, improve commuter safety, stamp out illegitimate drivers and restore order to the PSV sector. The study objective was to determine how these provisions of Legal Notice Number 161 affected the underwriters of PSV insurers in Kenya. The literature review explored concepts in risk and insurance, reviewed underwriting considerations in commercial motor vehicles, moral hazard and adverse selection challenges in automobile insurance, commercial motor vehicle insurance claims process, and the commuter transport sector in Kenya. The study looked at the situation before and after the implementation of legal notice number 161. The study used an exploratory survey design. The population of the study was confined to six insurance firms which insured PSV. The primary data was collected by means of a self-administered questionnaire that employed open and closed ended questions. Descriptive statistics consisting of the arithmetic mean, standard deviation, and graphical methods were used to present the findings. The study concluded that PSV insurers in Kenya placed a lesser emphasis on the conduct of the driver and the crew. After the implementation of this legal notice number 161 greater emphasis was placed on risk assessment of the mechanical conditions of the vehicles. On the other hand, claims related factors and fraud detection were top priorities before and after the implementation of legal notice number 161. The study findings recommended Kenyan government consistency in enforcing compliance of the LNN 161 of 2003 regulations.Item STRATEGIC DIRECTION IN LEADERSHIP AND PERFORMANCE OF INSURANCE COMPANIES IN KENYA(International Journal of Economics, Commerce and Management, 2022-11) Ramadhan, ZainabuThe purpose of this study was to examine the role of strategic direction in leadership and performance of insurance companies in Kenya. Owing to insurance industry contribution to the economic growth of a country there was need to establish the low insurance services. The study therefore sought to find out if this low uptake of insurance products was associated with strategic direction in leadership in the insurance industry. The study population comprised of the 55 insurance companies in Kenya and a census approach was adopted for each and every company. A self- administered questionnaire was presented to the business strategic managers of the insurance companies. Data was first subjected to descriptive statistics. Further, simple linear regression was fitted to examine the role of strategic direction in leadership on performance of insurance companies in Kenya. The results of the study indicated that performance of majority of insurance companies were influenced by strategic planning and leadership. In addition to that most of the respondents were in agreement that through strategic direction in leadership they have managed their customer needs optimally. There was neither agreement nor disagreement on whether strategic direction enhanced the growth of profit levels in their respective insurance companies. The results of the findings were in support of strategic leadership theory that supported provision of strategic direction in order to optimize achievement of organization goals and objectives. There was however a general consensus that insurance companies’ strategic plans should clearly articulate their vision and mission.Item MANAGEMENT CAPABILITIES ON PERFORMANCE OF MICROFINANCE BANKS IN KENYA(International Journal of Economics, Commerce and Management, 2021-11) Ramadhan, Zainabu; Onyango, Jared AbongoFinancial institution’s role in economic development and sustainability ought to be supported so as to enhance performance. Theoretical arguments such as resource-based view allude that organization performance is contingent to resources that may either be tangible or intangible. Hence, the current study evaluated the effect of management capabilities on performance of micro finance banks in Kenya. The study was based on dynamic capabilities theory. Descriptive research design was applied and primary data sourced through self-administered questionnaires. Descriptive statistics and simple regression analysis analyzed the data. It was documented that there was a positive and significant effect of management capabilities and firm performance of micro finance banks in Kenya.Item INFLUENCE OF THE UNDERWRITING CAPACITY OF ALLIANCE PARTNERS ON PERFORMANCE OF INSURANCE FIRMS IN KENYA(International Journal of Economics, Commerce and Management, 2017-11) Ramadhan, Zainabu; Oloko, Margaret; Ongore, VincentThe increasing role of strategic alliances in the modern business landscape cannot be gainsaid. The objective of this paper was to determine the influence of underwriting capacity of alliance partners on the performance of insurance firms in Kenya. The study adopted a cross-sectional descriptive survey research design and the target population was 44 insurance firms. Purposive sampling technique was used to select four respondents from each insurance firm that is General Manager in charge of Technical Operations, Underwriting Manager, Claims Manager and Marketing Manager giving a sample size of 176 respondents. This study adopted 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 underwriting capacity and performance of insurance firms. There is therefore need for a clearly defined strategic plan of action aimed at maximizing on mobilization of transaction volume, expeditious execution of claims settlement and work plans geared towards maximizing the insurer’s firm market share.Item INFLUENCE OF LIQUIDITY POSITION OF ALLIANCE PARTNERS ON THE FINANCIAL PERFORMANCE OF INSURANCE FIRMS IN KENYA(International Journal of Economics, Commerce and Management, 2021-11) Ramadhan, ZainabuFinancial performance marks improvement in quantity, quality, and efficiency of financial intermediary services. The recurrent changes in the global economy, especially recession and general business environment dynamics, low market penetration and market share of insurance products, especially in the African continent, have necessitated the formation of horizontal alliance strategy. Business agreements such as those relating to alliance formation are key business trends that have become increasingly important in recent years. The study adopted a cross-sectional descriptive survey research design and the target population was 44 insurance firms. Purposive sampling technique 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 size of 176 respondents. This study used primary data obtained from administration of self-designed questionnaires. The study also used secondary data obtained from Insurance Regulatory Authority of Kenya. 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 liquidity position and financial performance of insurance firm’s insurance firms in Kenya. The study recommends liquidity creation, premium incomes and recapitalization as measures that can be taken to enhance insurance firm’s liquidity position which the management and policy makers should consider.Item INFLUENCE OF DIVERSIFICATION OF RISKS AMONG ALLIANCE PARTNERS ON THE FINANCIAL PERFORMANCE OF INSURANCE FIRMS IN KENYA(International Journal of Economics, Commerce and Management, 2021-11) Ramadhan, ZainabuThe motivation behind the alliances is increased competition for market share, and to enable these firms to build internal capacity, engage in cross-border expansion, expand distribution channels, grow existing business when organic growth is difficult and diversify risks. The financial performance of insurance firms, just like any other business, is of cardinal importance. This is not only for their long-term survival but also as a precondition to the stability and growth of a country’s economy owing to the fact that insurance service is the “oil that lubricates” the engine of a country’s economy. 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 determine the influence of diversification of risks among the alliance partners on the financial performance of insurance firms in Kenya. The study adopted a cross-sectional descriptive survey research design and the target population was 44 insurance firms. Purposive sampling technique 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 size of 176 respondents. This study used primary data obtained from administration of 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 diversification of risks and financial performance of insurance firms. The results showed that R square was 0.876 indicating that 87.6% of the variation in financial performance can be explained by a unit change in diversification of risks The study recommends insurers to form horizontal alliance with the intention of not only minimizing risk, but diversifying systemic risk which affects all policies and poses a big threat of destabilizing portfolio premium income.Item INFLUENCE OF CO-INSURANCE OF LARGE RISKS ON THE PERFORMANCE OF INSURANCE FIRMS IN KENYA(International Journal of Economics, Commerce and Management, 2017-11) Ramadhan, Zainabu; Oloko, Margaret; Ongore, VincentThe 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.