The Challenges Facing Administration Motor Insurance Management and Operational Risk in Kenyan Insurance Company

15608 Words Apr 23rd, 2012 63 Pages
The challenges facing administration Motor Insurance management and operational risk in Kenyan Insurance Company

Presented by

Moses Mbwika- 11-909

Dr. Peter Ngure

Paper submitted in partial fulfillment of the course BUS 611: Business Research Methods

Daystar University

Nairobi, Kenya

29th April 2012

CHAPTER ONE: INTRODUCTION
1.1. Background of the study
Although the exact date of birth of the insurance industry in East Africa is not known, there is evidence that the first marine agency was established at the Island of Zanzibar in 1879. It took another twelve years before another marine agency was established in Kenya in 1891. Motor vehicle owners in Kenya were legally compelled to take out insurance against traffic
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Passenger carrying vehicles are generally categorized into the following three classes for underwriting purposes; public hire vehicles, private hire Chauffeur driven vehicles and private hire self-drive vehicles (Canner, 2007). Public hire vehicles are licensed to ply for hire. They include vans, mini-buses and pick- ups. The vehicles are hailed in the streets though local bylaws restrict the waiting points of such vehicles. This class is regarded as the highest risk because of maximum use of the vehicle and drivers coupled with high levels of moral hazard.

Private Hire Chauffeur driven vehicles are hired for passenger travel through the operator’s office or agency. The vehicles tend to cover extensive mileage with drivers working for long shifts. One sector of this class which is regarded as good is the prestige limousine arena where vehicles are used for wedding purposes, as hearses and for other private functions. Finally, Private Hire Self-drive vehicles are made available to the hirer. Regrettably the vehicles which fall under this class are misused by the hirers. To mitigate this, a pre and post-hire inspection is carried out by the owners of the vehicles (poll M., et al, 2009).

1.1.2. Experience in Kenya

Kenya, with an average of 7 deaths from the 35 crashes that occur

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