Effect Of Bancassurance On Life Insurance Penetration In Kenya

Abstract

Kenya’s insurance industry leads within East Africa Community and is a key player in the Common Market for East and South Africa (COMESA)region. However, despite this achievement life insurance sector has not contributed significantly to Gross Domestic Product (GDP)with very low penetration levels. Due to deregulation, advancement in technology and globalization, new innovations have been realized that include bancassurance which is described as the way to go. Few studies have been done relating life insurance penetration to bancassurance.This study focused on the effect of bancassurance on life insurance penetration in Kenya. The study was guided by four specific objectives: Establish theeffect of bancassurance branch networks on life insurance penetration in Kenya; effect of bancassurance clientele on life insurance penetration in Kenya, determine the effect of bancassurance technological platformon life insurance penetration in Kenya: and determine the effect of bancassurance product innovations on life insurance penetration in Kenya. The study involved a survey of commercial banks operating in Kenya that have adopted the bancassurance model. Primary data was collected using questionnaires for the purpose of answering the research questions.A census of26 commercial banks offering bancassurance was used.Regression analysis was used to establish the effect of bancassurance on life insurance penetration in Kenya. The research established that based on the data collected there is a positive relationship between bancassurance branch networks, bancassurance clientele, technology and insurance penetration in Kenya. The study recommended that management of banks ought to formulate strategies to foster adoption of bancassurance to their customers through intense advertising to the customers most of whom are not insured.