BBSA Research Projects

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Browsing BBSA Research Projects by Subject "Actuarial science"

Now showing 1 - 3 of 3
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    An Aggregate analysis of the impact factor of the index based livestock insurance pastoralists in Kenya
    (Strathmore University, 2018) Matano, Del Words
    The purpose of this study was to quantify the effects of Index Based Livestock Insurance in Kenya on income generation and welfare enhancement of pastoral households. Index-Based insurance attracts attention as a potentially effective tool for reducing vulnerability of agricultural household’s in developing countries. However, previous literature has assumed away how household intertemporal behavior and welfare would change by reduced production risk and shock due to index-based insurance. The paper employed the endogenous treatment regression model in order to quantify the effects of Index Based Livestock Insurance on an aggregate level. The study finds that insurance provision induces pastoralists to shift production towards higher return but higher risk breeds of livestock. The results support the view that financial innovation can mitigate the real effects of uninsured production risk.
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    Pricing a post-retirement medical insurance product
    (Strathmore University, 2018) Ndubai, Jackline Mwendwa
    Privately purchased medical insurance is very expensive for retirees. In Kenya, some companies even put an age cap restricting on insurance. A post-retirement medical insurance product helps in planning for medical expenses after retirement and ensures that such expensive costs are avoided. This paper reports on the pricing procedure undertaken for the new upcoming product as well as the sensitivity of the profit margin to the various variables used in the model. Profit testing of the product was run on one of the insurance companies in Kenya. The pure premium method is used to obtain a premium based on claims experience, instead of guessing a reasonable premium' to be used in the profit testing model. Data was obtained from an insurance company and constituted of their medical claims experience as well as their loss ratios over 2013-16. Premiums were calculated and a mispricing established in a case where profit testing was not incorporated. The study also revealed that the fund charge, inflation and the investment rate were significant in the pricing process and had a significant impact on the profit margin. Every insurance company's goal is to make profit. Hence, even if the company strives to make post-retirement health-care affordable, the company should ensure that the pricing model constructed results in a reasonably profitable premium. The incorporation of profit testing reduces the likelihood of a mis-pricing scenario. Furthermore, it is important that the inflation rate, investment rate and fund charge actual values are as close to the expected values as is possible.
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    Quantification of foreign exchange exposure in insurance companies in Kenya
    (Strathmore University, 2018) Kantai, Sanau Milanoi
    The study sought to quantify foreign exchange exposure in insurance companies in Kenya. This was achieved through evaluating twenty Kenyan insurers using two main objectives. The first was to establish the statistical significance of foreign exchange exposure for Kenyan insurance companies. A by-product of this, was that the optimal lag at which the different insurers experience the highest exposures could be defined. The second objective was to determine whether general insurers experience more significant foreign exchange exposure than life insurers. To accomplish this, the study employed a cash flow-based technique; the Almon Polynomial Distributed Lag model, which modelled the change in individual companies' operating income caused by changes in the foreign exchange rate. Using the above model, the study found that sixty percent of the insurers sampled had significant foreign exchange exposure. This reinforced the conclusion that the insurance industry in Kenya has a statically significant foreign exchange exposure. However, the study failed to prove that general insurers experienced exposure to a greater level of severity than life insurers.