INTERMEDIARY FACTORS AFFECTING PERSISTENCY OF ORDINARY LIFE ASSURANCE POLICIES IN KENYA

Abstract

It is the expectations of good corporate governance that the managers take stock of the risks their respective businesses are exposed to so as to put in place both preventive and control measures. In light of this, there is a wide spread customer dissatisfaction in the life assurance subsector on account of persistency  as brought to the fore by the persistency rates posted by the Insurance Regulatory Authority. This is partly due to the fact that the reputation of the industry has been eroded over the years as a result of both perceived and actual malpractices. The study aimed at assessing the intermediary factors affecting persistency of life assurance policies in Kenya. The research design for the study was descriptive research design. Given that there are only 24 life underwriters, the study took a census of all the companies rather than sample them. A structured questionnaire for the collection of quantitative data was presented to 48 respondents being 24 underwriting managers and 24 marketing managers of life underwriters in Kenya. The main statistical procedures for the analysis of quantitative data were descriptive statistics such as frequency distribution and percentages and dispersions. Inferential analysis was carried out using correlation analysis and regression analysis. Correlation analysis was employed to establish the relationship that exists between independent variable and the dependent variable. The study revealed that there was a statistically insignificant positive relationship between persistency and intermediary factors (r= 0.099, p=0.507) at a significance level of 0.01. Regression analysis was used to show how intermediary factors influence persistency of ordinary life assurance policies in Kenya. Intermediary factors had a beta coefficient value of 0.148 and a p-value of 0.224 making it have a statistically insignificant effect on persistency of ordinary life assurance policies. Insurance companies should focus on professional certificates, experience, ethical conduct and customer service training in the selection and vetting of intermediaries. In addition, insurance companies should provide training on intermediaries, at least twice in a year, on customer service and ethical conduct.