MEDIATION EFFECT OF CANNIBALIZATION ON THE RELATIONSHIP BETWEEN DIVERSIFICATION AND PERFORMANCE OF INSURANCE COMPANIES IN KENYA.

Abstract

This study sought to find out the mediation effect of cannibalization on the relationship between diversification and performance of insurance companies in Kenya. All the registered and licensed insurance companies were considered in this study. A regression model was used to test the relationship among the interacting variables. Cannibalization was found to have a negative significant effects on the relationship between diversification strategies and performance of insurance companies. Adoption of either bancassurance, online marketing or both negatively affected performance of insurance agents. When banks sell insurance products to the same customer targeted by agent, the resultants effect is demotivation leading to low productivity hence low performance. This study recommends that insurance companies should come up with new ways to ensure insurance agents are motivated and don’t perceive diversification as a threat but as a complimentary mechanism to increase their sales.