Operational Restructuring and the Performance of Insurance Firms in Nakuru County, Kenya

Abstract

The insurance industry in Kenya exhibits serious performance challenges including low penetration rate of 2.17% against a global average of 7.4%. To address these challenges and improve performance, insurance companies have begun pursuing different restructuring strategies with the view of enhancing efficiency and improving competitiveness. However, there is little evidence that a systematic study has been conducted to examine their impact on organizational performance. It is in this regard that this study sought to examine the influence of operational restructuring on the performance of insurance firms in Nakuru County. The study was guided by the Porter's Theory of Competitive Advantage and adopted a descriptive research design. The study targeted a population of 30 branch managers from the study area obtained but only 19 were able to complete the study. Pre-tested questionnaires were used for data collection. Both descriptive statistics and the Fisher exact test were used for analysis. Descriptive results indicated active engagement in operational restructuring activities including effective delegation of duties, promoting leadership qualities, encouraging employee involvement, maintaining sufficient staffing levels, adopting new information technology, and outsourcing non-core functions. The Fisher’s exact test (p=.023) revealed a strong, positive, and statistically significant relationship between operational restructuring and performance of the insurance firms. The study concludes that operational restructuring is vital for enhancing performance of insurance firms. The study recommends firms to prioritize operational efficiency initiatives. Managers should invest in upgrading technology, optimizing processes, and expanding outsourcing of non-core functions to improve productivity and cost-effectiveness. Policymakers are encouraged to a conducive environment for operational restructuring. Future research should examine long-term effects, compare across sectors, and incorporate qualitative methods to deepen understanding of contextual influences on operational restructuring outcomes