Strategies adopted by the insurance regulatory authority in enhancing compliance in the insurance industry in Kenya.

Abstract

There is need to regulate and supervise any industry for it to achieve competitive edge. However there may be challenges that may come with new regulations leading to lack of compliance. Regulators therefore must adopt strategies that respond to compliance or non-compliance. This study sought to investigate the strategic responses adopted by IRA in enhancing compliance as well as determine the challenges that the regulator encountered in adopting these strategies. A case study research design was adopted as it sought to gain an indepth understanding of the challenges of implementing regulation and compliance. A total of 5 respondents were interviewed using an interview guide. Both primary and secondary sources of data were used. The research findings indicated that IRA had introduced regulations such as minimum capital requirements, policy holder compensation fund, new guideline on registration and renewal of licenses, guidelines on insolvency of insurance companies and bancassurance so as to protect the consumer of insurance. To enhance compliance, IRA adopted strategies like ICT, infrastructure, research and development, administrative sanctions, consumer protection and education as well as risk-based capital. The research also found out that there were challenges of adopting these strategies which included low utilization of ICT in the industry, new and emerging issues in the industry, poor corporate governance, insurance fraud and overlap of supervision. The recommendations included investing in consumer education and training; enhanced corporate governance, research and development in order to come up with innovative products. In conclusion, the insurance industry in Kenya is still promising and with proper legislation and regulation and compliance it can grow to increase the GDP of the country.