Information and Communication Technology Governance and Performance of Insurance Companies in Nairobi City County, Kenya

Abstract

The insurance industry significantly contributes to the Gross Domestic Product and provides unique financial services to businesses in the Kenyan economy. Insurance firms are involved in the process of risk transfer and distribution which shield businesses from various risks. The performance of insurance firms is therefore critical to the survival of the economy in general. However, insurance firms in Nairobi City County have posted poor performance for many years resulting in business closure, profit warnings and some firms placed under receivership for failing to meet shareholder targets. Further, market penetration has remained at three percent, significantly lower compared to the global average of six percent. Past research studies on the determinants of firm’s performance in the insurance sector in Kenya have produced mixed and sometimes conflicting results. Further studies have to be done to investigate the link between elements of ICT governance and firm performance of insurance firms in the context of developing countries. Since ICT has become pertinent in the operations of organizations, the aim of this study was to analyze ICT governance and performance of insurance firms in Nairobi County, Kenya. The targeted population was all the 55 licensed insurance companies operating in Nairobi County. The study sought to achieve the following objectives: to investigate the influence of ICT governance frameworks on firm’s performance, to examine ICT and business strategy alignment influences firm performance and to establish the influence of ICT value delivery on firm’s performance in insurance firms. A descriptive survey research design was used in the study and descriptive, relational and inferential statistics were used for data analysis. The target population was all the insurance firms in Nairobi City County. Data was gathered using a questionnaire and analyzed with SPSS software package. The study results would benefit managers in insurance firms in Nairobi City County and also serve as a resource for researchers and practitioners in the ICT governance domain. The findings showed that ICT governance frameworks and ICT business strategy alignment significantly influenced performance of insurance companies. The final regression model achieved an R square value of 0.739 which means that 73.9 percent of the variation in the performance of insurance companies can be accounted for by a combination of the three variables. Based on the findings, the study recommended the board of management in insurance companies to implement ICT governance frameworks to improve performance