Influence of Socio-Economic Factors on the Demand for Life Insurance in Kenya
Abstract
The business of life insurance has been receiving attention in recent years as a critical driving force of economic growth in both developed and developing countries. Additionally, insurance industry forms an integral part of the global financial market, with insurance companies being significant institutional investors. The demand of life insurance industry in Kenya is lower than the country's average economic growth meaning that other sectors of the economy are growing faster than life Insurance. This study assisted in understanding the socio-economic factors affecting the demand for life Insurance in Kenya. The specific objectives are the effects of level of income, insurance premium, perception and awareness on demand for life insurance in Kenya. The study population target was the 17 licensed life insurance providers in Kenya. The sample size included sales agents totaling to 290 respondents. The study used both primary data and secondary data. Primary data was collected through the administration of the questionnaires. Secondary data was used to collect life insurance demand using fund size growth for the period 2014-2018. Descriptive statistics was used to perform data analysis. This study used correlation and regression to link the relationship between the independent and dependent variables. The study found out that income level and life Insurance demand is positively and significantly related (β=3.264, p=0.000). The results further indicated that insurance premiums and life Insurance demand are negatively and significantly related (β =-7.135, p=0.000). Customer perception and life Insurance demand were positively but not significant (β =1.786, p=0.056). Lastly, insurance awareness and life Insurance demand were positively and significantly related (β =2.616, p=0.001). Based on the findings the study concluded that level of income had a significant effect of life insurance intake. Most of the defaulters in our insurance company are the low income earners and many of were customers are high income earners. Most of the customers asserted the premiums are high. Further, majority of the customers are not. Lastly, the study concluded that there was low level of awareness and lack of knowledge of insurance products. The study recommends that insurance companies should push and market policies that provide for both risk coverage and savings component because that what the customers prefer. The Association of Kenya Insurers (AKI) must sensitize its members on the best training opportunities to ensure that the services offered to the life insurance clients by the sales staff are value adding and in the best possible way.
Keywords: Level of Income, Life Insurance Demand, Insurance Premium, Customer Perception and Kenya.
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