Investigation of factors affecting public perception of life insurance in Kenya: a case of life insurance companies in Nakuru Municipality
Odongo, Constance Akiso
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The life insurance industry in Kenya continues to experience various challenges, key among them the poor public perception, which has led to low penetration levels. The current study sought to investigate the factors affecting the public perception on life insurance: a case of life insurance companies in Nakuru Municipality. The specific objectives included: to assess the effect of demographic factors on public perception of life insurance in Nakuru Municipality, Kenya. to assess the effect of socio-cultural factors on public perception of life insurance in Nakuru Municipality, Kenya and to assess the effect of organizational factors on public perception of life insurance in Nakuru Municipality, Kenya. The study adopted descriptive survey design where seven life insurance companies in the town were selected to participate in the study. The seven life insurance companies in Nakuru are: CFC, Jubilee, Old Mutual, CIC, Panafric, British American and ICEALION. Teachers in public secondary schools in the municipality were also selected to represent the general public. The researcher randomly selected a sample of 45 sales agents from the seven companies. Lastly 75 secondary school teachers to represent the public were purposively selected to participate in the study. Questionnaires were used to elicit data. Data collected was coded, cleaned and analyzed using Statistical Package for Social Sciences (SPSS) computer programme to facilitate addressing the research objectives and questions. Statistics used in data analysis included, frequency counts, percentages, mean mode and correlation analysis to test for relationships. The study revealed that: The public generally had a negative perception towards life insurance though not very strongly negative according to of agents 24(59%). On the demographic characteristics affecting perception age of teachers played a key role in shaping their perception on insurance r = 0.606, the level of income also played a role at r = 0.653, duration of service r = 0.745, cultural beliefs, religious affiliations and peer pressure were also found to affect perception on life insurance as evidenced by r = 0.246, 0.380 at 0.01 confidence level. The high premium charged by insurance companies also influence their perception on life cover as indicated by r = 0.394 significant at 0.0 I confidence level. Low returns on policy r = 0.652, and customer handling r = 0.402 played a role at a confidence level of 0.01. The study therefore recommended that Life Insurance companies should intensify their efforts in enlightening the public on the role played by life insurance in the economy and encourage the purchase of life insurance cover to all people, there is need for life insurance companies to redesign their products tailor made to suit Kenyans of different socio economic background taking into account the current hard economic times. The government should also intervene by creating a policy that would force insurance companies to honor their claims whenever they fall due and also guide in the assessment and judgment on damages whenever necessary. Further studies should also be conducted on the strategies that life insurance companies can adopt in reversing the effects of negative perception towards their products, and the factors that customers consider in the choice of a life insurance cover.