Risk mitigation strategies adopted by Insurers in Kenya

Abstract

The objectives of this study were to identify the types of risks mitigated by the Kenyan insurers, mitigation strategies and. techniques adopted, and the challenges facing the insurers in risk mitigation process. This was an exploratory study, hence survey methods were used to identify the risks in the Kenya's insurance sub-sector and the techniques available for managing them. The target popuiation included all the 43 licensed insurers in Kenya. Primary data was collected using self-administered questionnaires and data analyzed with the help of SPSS using descriptive statistics such as frequencies, percentages, mean score and standard deviations. The Kenyan insurance industry was mainly found to be vulnerable to economic risks and legal risks. However, the industry was also affected by political risks, technological risks, socio- cultural risks, geographical risks, management risks and personnel risks to a moderate extent. These were mainly mitigated using, risk avoidance, risk retention, risk transfer and risk reduction techniques. The main challenges faced by the firms in risk mitigation included lack of appropriate ris~ identification tools, lack of the right human resources, lack of top management support, inabilityto understand the nature and implication of risks, budgetary constraints and inability of sustaining mitigation strategy . .~. Towards ensuring sustainability in the industry, there is an urgent need for the insurance firms to frequently train their staff on risk mitigation, empower risk managers, identify and train internal risk experts, and provide adequate budgetary allocations for risk mitigation