EFFECT OF LIABILITY MANAGEMENT POLICIES ON ORGANIZATIONAL PERFORMANCE OF INSURANCE COMPANIES IN KENYA
Meshack Nakitare Nyongesa
Jomo Kenyatta University of Agriculture and Technology (JKUAT)
Dr. Mouni Gekara
Jomo Kenyatta University of Agriculture and Technology (JKUAT)
Dr. Kennedy Ogollah (PhD)
Jomo Kenyatta University of Agriculture and Technology (JKUAT)
Dr. Gichuhi A. Waititu
Jomo Kenyatta University of Agriculture and Technology (JKUAT)
CITATION: Nyongesa., N. M. Gekara., M. Ogollah., K. 2016. Effect of Liability Management Policies on Organizational Performance of Insurance Companies in Kenya. European Journal of Business Management. Vol 2 (11) PP. 30 - 41
ABSTRACT
The purpose of the study was to establish the effects of liability management policies on organizational performance of insurance companies in Kenya. The study adopted descriptive research design. The population of the research consisted of the 49 licensed insurance companies in Kenya as at 2013 which constituted the units of analysis. The study used both secondary and primary data. Secondary data was for the organizational performance of the companies while primary data was for the information on the financial management practices used by insurance companies in Kenya. Statistical Package for Social Sciences (SPSS) was used in the analysis of data and results were presented on frequency tables to show how the responses for the various variables and indicators posed to the respondents. Reliability and validity tests were conducted to determine the internal consistencies of the variables under investigation. Analysis of Variance (ANOVA), multiple regression and correlation analysis was carried out to test the hypothesis. The data was analyzed by use of descriptive and inferential statistics. Descriptive statistics produced frequencies, trends, means and percentages while inferential statistics produced regression and correlation results which show the relationship among the variables. The study findings indicated that production of monthly financial statements was important in monitoring liability management of the company, the company management was particular about monthly targets for each department as guided by departmental targets, the management conducted variance analysis every month as a way of monitoring performance. In addition the companies had put in place claims settlement policies to curb fraud and the company ensured that the correct procedures are followed in settling claims. Regression results indicated that there was a positive relationship between liability management policies and organization performance of insurance companies in Kenya. The study concluded that managers can increase profitability by putting in place good credit policy, short cash conversion cycle and effective cash flow management procedures. It is suggested that insurance companies be encouraged to better manage their reliance on equity capital. Management of insurance companies should also strategize on best possible means of ensuring there are minimal adverse effects of non current assets management and capital structure management practices on the company’s financial performances.
Key Words: Liability Management Policies, Financial Management Practices, Organization Performance, Insurance Companies
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