BBSA Research Projects (2018)
Permanent URI for this collection
Browse
Browsing BBSA Research Projects (2018) by Subject "Insurance"
Now showing 1 - 8 of 8
Results Per Page
Sort Options
- ItemAn Aggregate analysis of the impact factor of the index based livestock insurance pastoralists in Kenya(Strathmore University, 2018) Matano, Del WordsThe 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.
- ItemA Comparison of aviation insurance to the rest of the general insurance sector in Kenya(Strathmore University, 2018) Ochwada, Imaan NasuboWith the popularity of insurance cover booming in Kenya, individuals are scrambling to acquire insurance policy to protect their property, health and loved ones in the event of their death. The premium amount charged for a given cover differs from one insurance type to another due to the difference in risk factors. For Example, for motor insurance, the make, model, year and history of the car affect the premium. For fire, the items worth at the time of cover is a risk factor. For aviation, the type of aircraft, the experience of the pilot as well as the business involved (passenger/cargo). This study's objective is to determine if aviation insurance is as risky as perceived and its comparison to other forms of general insurance. We aim to see how other forms of general insurance perform and how aviation insurance performs relative to that
- ItemEffects of fraud management practices on the profitability in the insurance industry(Strathmore University, 2018) Ndolo, Lucy NzivuluThe purpose of this research was to study the effect of fraud management practices on the profitability of insurance companies in Kenya. The category of fraud focused on was the policyholder and claims fraud which is defined as the fraud against the insurer in the purchase and/or execution of an insurance product by obtaining wrongful coverage or payment. The deductive arguments adopted were; the reasons for fraud risk management in insurance companies in Kenya based on the International Association of insurance Supervisors, the fraud management practices carried out by insurance firms in Kenya more specifically aligned with the claims management guidelines stipulated by the IRA under section 8 of the guidelines and finally the relationship between the fraud management practices and profitability of insurance firms in Kenya. Primary data was collected using a structured questionnaire. Secondary data was collected from the industry statistics provided by AKI for the past three years. The financial data extracted was the net profit and the total assets to obtain the ROA, to indicate profitability. The companies chosen were the top fifteen general insurance companies. The findings of the study showed that fraud risk management policies in insurance companies in Kenya are driven by the need to meet ethical standards as well as the need to enforce regulatory/supervisory standards. Moreover, the most common fraud management practice was fraud response in which investigations were the most preferred technique. Finally, the results of the regression analysis revealed a low correlation between fraud management practices and profitability
- ItemA Framework to model the monetary value of brands for insurance companies in Kenya(Strathmore University, 2018) Kigwa, Lilian WanjiruThe purpose of this study was to come up with a framework for measuring brand equity for insurance companies in Kenya. The concept of brand is widely gaining popularity and plays a role in consumer decision making. Managers are putting in hours of work to create a favorable brand name for their company with no precise way of measuring whether their efforts bear fruits. This study provides a means to measure those efforts for insurance companies in Kenya. In the efforts to meet the stated objective, I used the revenue premium approach and also investigated the role that brand plays in decision making. The study carried out investigations through the use of choice experiments and an analysis of financial statements belonging to 4 insurance companies.
- ItemImpact of longevity improvements on life insurance companies: a study of Taiwan(Strathmore University, 2018) Maina, Catherine WacheraThe whole world has noted an unmatched reduction in the mortality rates and Kenya is no exception. These on-going improvements have brought out the need of mortality forecasting for annuitants as well as pensioners in order to prevent insolvency. This has compelled academicians and actuaries to focus their interest in the particular field of mortality and longevity risk. Appropriate modelling techniques or projected life tables are needed for pricing and reserving. In pa1ticular the use of stochastic models which take into account various risk causes and components and the relevant impact on portfolio results as opposed to deterministic models that were only based on expected present value. This study extends the literature by using the Lee-Carter method to forecast mortality risk for life insurance companies. The main focus of this paper will be to determine the uncertainty associated with future mortality and how it impacts on the overall risk assessment of Life Insurance companies in developing countries. Using the Lee-Carter proposed by Lee-Carter in 1992 to fit mortality rates, I forecasted future mortality trends using the past trends in mortality rates. I then determined the impact that the mortality trends have on life insurance companies. This results show that improved longevity has a big impact on the cash flows of life insurance companies since they affect the Actuarial Present Value.
- ItemMotor private vehicle rating model(Strathmore University, 2018) Pokar, Heta VinodMost motor insurance companies in Kenya collect about 5-l 0 rating factors in their proposal forms. Despite having these data, these companies have in the past used the minimum rates prescribed by the Insurance Regulatory Authority (IRA). This implies that they are less likely to be aware of rating factors and their importance in pricing. This may justify one of the major reasons as to why motor insurance companies have been loss making. Although the minimum rates were specified, there was no regulation that compelled insurance companies not to price using rating factors. Thus although they collected data on the rating factors, they used the minimum rates possibly due to competitive pressure and market practice. However, IRA has recently issued a circular1 to insurance companies that abolishes the use of minimum rates from 2018 thus insurance companies will be required to price based on their own experience. Rating factors fom1 the basis for pricing. Therefore, the overall objective of this study is to assess the use of rating factors to price motor premiums in light of the new IRA regulations. The past experience and data will be used to evaluate the use of relevant rating factors to price motor insurance policies and develop a simplified pricing model to compute premiums. A motor rating factor model is a simplified model that enables you to calculate the premium to be charged on a particular motor depending on the various rating factor such as type of cover, year of manufacture, engine rating, body type, make, color, carrying capacity, value of the car, age and profession of policyholder. Each of these factors contribute to the pure risk premium. The total premium payable is the combination of pure risk premium, expense premium, commission premium, profit loadings premiums and any other optional benefits. The findings of this model show that the premium rate varies significantly from the current model that assumes a fixed minimum rate on the value of the car.
- ItemOperational risk modeling for general insurance companies in Kenya(Strathmore University, 2018) Mwangi, Michael MainaThis study looked at the quantification of operational risk based capital for general insurance companies in Kenya. It is important to note that the regulator requires all insurance companies to compute risk based capital annually. The study pointed out the various operational risk categories and analyzed the operational risk modeling approaches that have been developed in the insurance sector globally. In Kenya, the model used by the regulator to quantify operational risk capital is that recommended by the actuarial profession in the United Kingdom (Solvency II). The main shortcomings of the model used by the regulator were cited as lack of prudence in the estimation of capital requirements and the failure to truly indicate how insurance company operations interact leading to operational losses. The study then illustrated how a proxy-a hybrid modeling approach, could be used to quantify operational risk. The hybrid model was shown to be more prudent than the standardized approach used by the regulator. The methodology involved modeling a general insurance company and creating a hybrid simulations model for operational risk losses. Further, operational risk capital estimates were computed using the model by the regulator and the hybrid simulations model. The operational risk capital estimates were compared and tested for adequacy. The results led to the conclusion that the hybrid model yielded a more prudent operational risk capital estimate than the model used by the regulator. Based on the overall conclusion that the standardized method may not be fully adequate in computing operational risk capital, it is hoped that this study will encourage best practice in computing operational risk capital. It is also hoped that the study increases interest in Kenya's actuarial profession in the emerging field of operational risk
- ItemQuantification of foreign exchange exposure in insurance companies in Kenya(Strathmore University, 2018) Kantai, Sanau MilanoiThe 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.