Strategic Repositioning and Performance of Insurance Companies in Nairobi County, Kenya

Abstract

The dynamic business environment requires organizations to continuously adapt in order to remain competitive and ensure their survival and sustainability. Failure to adapt to these changes may lead organizations into strategic challenges that prevent their growth and sustainability. In Kenya, the insurance companies’ performance has remained relatively low, as reflected in the declining insurance penetration rate, which stood at 2.37% in 2020 compared to the peak performance of 3.44% recorded in 2013. Additionally, in 2020, twenty-four insurance companies held market shares of less than 3%, indicating persistent struggles to expand their market presence. The main aim of this research was to establish the effect of strategic repositioning on the performance of insurance companies in Nairobi County, Kenya. Particularly, the study sought to investigate the effect of market repositioning, determine the effect of product repositioning, examine the effect of competitive repositioning, and assess the effect of operational repositioning on the performance of insurance companies in Nairobi County, Kenya. This research was grounded in Product Life Cycle theory, Resource-Based View, Brand Equity, and Porter's theory of competitive advantage. The research utilized a descriptive research design. This study targeted 56 insurance companies. The observation unit comprised 336 management staff working in these firms at the lower, middle and top management levels. The research’s sample size was reached using a stratified random technique and calculated using Krejcie and Morgan's sample size determination formula, which resulted in a sample size of 179 participants. Questionnaires were administered for primary data collection, comprising closed- and open-ended questions. Quantitative data analysis was conducted through descriptive and inferential statistics. Descriptive analysis used percentages, standard deviations, frequencies, and means, while multiple linear regression was used to determine the effect of strategic repositioning on insurance companies’ performance in Kenya. The research found that market repositioning had a positive and significant effect on organizational performance in insurance companies, explaining 52.8% (R² = 0.528) of the variation in organizational performance. In addition, the study established that product repositioning had a positive and significant effect on organizational performance, explaining 53.0% (R² = 0.530) of the variation in organizational performance. Further, the study established that competitive repositioning had a positive and significant effect on organizational performance, accounting for 49.5% (R² = 0.495) of the variation in organizational performance. Moreover, the research established that operational repositioning had a positive and significant effect on organizational performance, explaining 54.8% (R² = 0.548) of the variation in organizational performance. The research recommends policymakers and the board of directors ensure market, product, competitive, and operational repositioning strategies are formalized and aligned with regulatory requirements and corporate objectives.