Abstract: The transformation in the financial Institutions over the past decades have resulted to several new products one among them is bancassurance which is the distribution of insurance products through a banks channel. Using three major variables i.e. Profitability, liquidity and customer base, this study sought to examine the concept of bancassurance and its effects on the performance of insurance companies in Kenya. It sought to show how bancassurance has impacted on these financial aspects of insurance companies. The researcher made use of theory of economies of scale, theory of financial intermediation and Modern Portfolio theory to show qualify several elements of these variables. A descriptive research design was adopted in this study to enable the study to generalize the findings to a larger population. The study targeted all the 10 registered insurance companies in Kenya doing bancassurance. Specifically, 87 respondents were chosen so as to reduce redundancies of data collected without compromising comprehensiveness of the same. Use of questionnaires was employed in the study and the collected data was analyzed using SPSS. The tests were conducted at 95% level of confidence (α=0.05). Regression analysis was also conducted to establish if there were any relationship between the dependent and independent variables. From the study, it was found out that with the adoption of bancassurance, the organizations had witnessed rising sales in turn resulted to increased profitability of insurance firms. On customer base, the findings indicated that an increase in the number of clients in each product bundle market reduces fees that increasing customer base. It was also found out that Bancassurance enhances increase of a firm’s liquidity. The study concluded that tying up with banks is the rational route for insurers to take for achieving extensive physical spread and countrywide customer access. Further, bancassurance adoption results to reduced operational costs since it enhances an efficient sharing channel with higher productivity and lower costs than customary distribution channels.
Keywords: Bank, Insurance Firm, Bancassurance & Performance.
Title: Effects of Bancassurance on Performance of Insurance Firms in Kenya
Author: Edah Chepkoech, Jane Omwenga (PhD)
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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