Information and Communications Technology Capabilities and Performance of Insurance Companies in Kenya
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Date
2021
Authors
Onyango, Otieno Winstan
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Performance of insurance companies in Kenya is lagging in terms of insurance
penetration, which is below three percent compared to the world's average of seven
percent. The low penetration has led to decline in net profits and eroding of shareholders'
returns; there is also fear among the insurance companies that they may exit the Kenyan
market. The research investigated the relationship between Information and
Communications Technology capabilities and performance of insurance companies in
Kenya. Aspects of ICT capabilities studied include information technology innovation,
artificial intelligence, big data analytics, and digital communications. Measures of
insurance companies’ performance examined were insurance penetration, insurance
density, and claims ratio. The study environment was insurance firms in Kenya. The
theories included were diffusion of innovation, theory of mind, and utility theory. The
research design for this study was correlational. Questionnaire was developed with google
form and administered through an email to the respondents. Respondents of this study
were IT managers of insurance companies. The target population was 56 IT managers
from registered insurance companies in Kenya. Study was conducted from all the
registered insurance companies. The collected data was analysed to get descriptive and
inferential statistics. R statistical software was used for the analysis of data collected.
Multiple regression analysis was conducted to determine relationship among variables.
Data was presented in frequency tables and graphs. The study findings revealed that ICT
capabilities contributed positively to performance of insurance companies. On IT
innovation variable, it has been revealed that majority of the insurance companies have
not partnered with the insurance technology start-ups. About artificial intelligence it was
found that most insurance firms are not using machine learning techniques to analyse
historical data and make predictive decisions from it, similarly they have not incorporated
chatbot advisors and facial recognition in their processes. The study revealed that
majority of insurance firms embrace big data analytics by gathering customers data from
various sources when underwriting or processing a claim, data is securely stored and
analysed to produce dashboard reports. Lastly about digital communications the research
revealed that insurance companies undertake digital marketing of products on social
media, use email with customers, their websites are credible having optimised search
engine and secured hypertext transfer protocol. Based on results from regression analysis
the study concluded that independent variables IT innovation and artificial intelligence
significantly contributed to insurance companies’ performance while big data analytics
and digital communications were insignificant. The study recommends that to improve
performance, the insurance industry should consider IT innovations such as partnership
with insurance technology start-ups. The study further recommends the insurance
companies to consider artificial intelligence capabilities such as machine learning, chat
bot advisors and telematics. The outcome of this study enables insurance companies,
policymakers, and academicians to have more knowledge and skills on how to harness the
ICT capabilities to address the challenges faced by lagging performance of insurance
firms in Kenya.
Description
A Research Project Submitted in Partial Fulfilment of the Requirements for the Award of the Degree in Master of Business Administration (Management Information Systems),Kenyatta University, 2021
Keywords
Information and Communications Technology, Capabilities, Performance, Insurance Companies, Kenya