Strategic Responses of First Assurance Company Limited to Competative Environment of the Insurance Industry in Kenya

Abstract

The insurance industry in Kenya has enjoyed increased growth. However, challenges for the insurance remains largely unchanged in the form of low insurance penetration and density. The insurance penetration in Kenya is very low about 3.16% according to the AKI report of 2012. Lack of awareness by the public about the benefits of insurance and the negative perception of the industry has contributed to this low insurance penetration .This in effect shows that the 7 insurance industry has a lot of potential which has not yet been tapped. The insurance penetration in Africa generally is very low with South Africa having the highest penetration .This suggests that the industry is generally operating below potential. The insurance act has been amended to establish the Insurance Regulatory Authority which is now an independent body from the Ministry of Finance and this has benefited the industry. Globalization and technological advancement has impacted on the insurance industry, it has created opportunities and as well as posed challenges to the industry. Insurance industry is one of the industries where competition is stiff and this has resulted to price wars where the major prayers have undercut premiums so as to win a bigger market share. This project is a case study of First Assurance Co, a composite insurance company in Kenya which has achieved tremendous growth in the last five years. A sample size of nine managers and assistant managers were targeted for this study , they were mainly those managers who have been with the company for a considerable period of time .The findings of this study cannot however be used to make generalizations for the insurance industry as a whole. The research was aimed at understanding how First Assurance Company has responded to changes in the external environment