EFFECT OF COOPETITION ON GROWTH OF INSURANCE FIRMS IN KENYA
EFFECT OF COOPETITION ON GROWTH OF INSURANCE FIRMS IN KENYA
Lilian Wangui Nguyo - College of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Enos Anene (PhD) - College of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
The insurance firms in Kenya have for a long time struggled with growth because of the low and yet declining insurance penetration rate. The sector has been characterized by cutthroat competition through price under cutting, leading to underwriting losses. Insurance firms continually struggle with claims settlement causing increased insurance apathy in the country, hence the poor penetration rates. These firms therefore need to explore other avenues from which their growth can be optimized. One of the strategies being employed by firms in more developed economies is co-opetition, which is a hybrid behavior of collaboration and competition within an industry or sector. The general objective of this study was to assess the effect of co-opetition on growth of insurance firms in Kenya. Specifically, the study sought to establish the effect of information sharing on the growth of insurance firms in Kenya, determine the effect of collaboration on research and development on the growth of insurance firms in Kenya, establish the effect of co-insurance on the growth of insurance firms in Kenya and examine the effect of cooperative pricing on the growth of insurance firms in Kenya. This research was based on the resource-based view theory, game theory, transaction cost theory and the social exchange theory to explain the relationship between the study variables. The study made use of both primary and secondary data. The primary data was collected using a structured questionnaire. An exploratory research design was adopted. The target population included all the 57 insurance firms operating in Kenya as of December 2022. A census was conducted on all the 57 insurance firms. The unit of observation were the heads of the finance, operations and business development departments in each of the 57 insurance companies giving a total of 171 respondents. Collected data was analyzed descriptively by use of means and standard deviation and inferentially by use of correlation and regression analyses using SPSS version 27. Data was presented in form of frequency tables. The regression analysis revealed significant relationships between the independent variables and the growth of insurance firms in Kenya. Information sharing (Beta = 0.238, p < 0.05), collaboration on R&D (Beta = 0.425, p < 0.05), co-insurance (Beta = 0.231, p < 0.05), and cooperative pricing (Beta = 0.695, p < 0.05) all exhibited positive and statistically significant effects on firm growth. The study concludes that a strategic emphasis on cooperative practices, including robust information sharing, collaborative R&D, co-insurance arrangements, and cooperative pricing, positively influences the growth trajectories of insurance firms in the Kenyan market. The study recommends the need to foster a culture of openness for information sharing, promoting industry-wide collaboration on research and development initiatives, exploring innovative co-insurance models, and advocating for fair and transparent cooperative pricing strategies. Further research could explore the impact of regulatory frameworks on the effectiveness of co-opetition strategies in the insurance sector, investigating how compliance requirements shape collaborative practices.
