Answer:
The operations and financial viability of insurance companies in Kenya are susceptible to a number of issues. Significant risks include the below.
Step-by-step explanation:
Underwriting risk: Losses from poor insurance policy pricing, inaccurate risk assessment, and unforeseen claims fall under this category. By conducting rigorous risk analyses, utilising actuarial models, and establishing reasonable premiums, insurance companies can reduce this risk.
Investment risk: To generate returns, Kenyan insurance companies heavily participate in the stock market, real estate, and other investments. Market volatility, liquidity risk, and credit risk are all potential threats to these assets. Insurance companies can diversify their investments and implement efficient risk management methods to mitigate such danger.
Operational risk: Refers to the possibility of financial losses brought on by inadequate or malfunctioning systems, procedures, and human error. By putting in place strong internal controls, spending money on technology, and making sure personnel are properly trained, insurance companies may reduce this risk.
Regulatory risk: Insurance businesses in Kenya are bound by an array of regulations, and quasi is punishable by fines or other sanctions. In order to reduce this risk, insurance companies need to make sure they are in compliance with all applicable rules and regulations and have a solid awareness of the regulatory environment.