An evaluation of the effectiveness of state regulation of the insurance industry in Kenya

Abstract

The insurance industry in Kenya has been neglected by successive governments in terms of reform and development. This stems from the colonial period when the colonial government established a solid banking foundation in Kenya to serve the settlers while it sourced all the insurance they needed from overseas. Over the years the industry has been on the news for reasons such as ethics, company collapse, insolvency, liquidation, court battles, fraud and mystery in its nature and operations. The regulatory regime seems to be invisible and yet there is an Insurance Act, offices and organizations set up by the Act to oversee the industry. Regulating this industry is of immense importance and crucial for its survival. It is through regulation that the industry may deal with ethical issues, economic downturns, winding up, insolvency, liquidation, political interference and increased rivalry between players. An effective and sound regulatory and supervisory system is necessary to protect policy holders, to maintain an efficient, safe, fair and stable insurance market that promotes growth and competition in the sector. There has been a general perception that the state isn’t doing enough about the state of the industry at the expense of innocent policy holders. This research therefore, sought to analyze the extent to which the state has succeeded in regulating the insurance industry in Kenya and to establish the factors that affect effective regulation of the insurance industry in Kenya