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ENABLING FACTORS FOR CAPACITY BUILDING IN THE INSURANCE 

SECTOR 

Dr. Ben Kajwang PhD 

 



American Journal of Human Resource   

ISSN 2520-4697 (Online)        

Vol.6, Issue 1, pp 80 - 87, 2022   

                                                                                                                                       

                                                                      www.ajpojournals.org   

 

80 

 

ENABLING FACTORS FOR CAPACITY BUILDING IN THE INSURANCE SECTOR 

Dr. Ben Kajwang PhD, ACII(UK), AIRM(UK), FIIU, FIIK, CPT, Chartered Insurer 

Chief Executive Officer, College of Insurance, Nairobi, Kenya 

Corresponding Author Email: bkajwang@coi.ac.ke 

 

Abstract 

Purpose: This paper makes a contribution to the existing body of research by investigating the 

elements that make capacity building in the insurance industry possible, focusing specifically on 

life and non-life premiums. The industry of insurance has the potential to be an important driver 

of both financial and economic growth. The industry has the ability to foster new investments, 

innovation, and competitiveness if it can lessen the impact of huge losses and the associated level 

of uncertainty. Insurance companies, in their capacity as financial intermediaries with extended 

time horizons for investment, can make a contribution to the development of long-term financial 

instruments that can be used to fund business investment and housing.  

Methodology: This study focuses mostly on conducting a literature review, specifically one that 

examines previous research on capacity building in the insurance sector and a search of the relevant 

literature was incorporated into the work technique. Relevant seminal references and journal 

articles for the study were identified using Google Scholar beginning in 2017 and ending in 2022. 

Findings: The findings indicate that the premiums for the insurance sector are influenced by 

factors such as the income per capita, the size and density of the population, demographic 

structures, income distribution, the size of the public pension system, the ownership of insurance 

companies by states, the availability of private credit, and religion. These elements, along with a 

number of others, have an impact on the non-life industry. The results reveal that the capacity 

expansion of the insurance sector can be enabled by a variety of different factors, despite the fact 

that some of these drivers are structural in nature.  

Unique Contribution to Theory, Policy and Practice: The studies also suggest that insurance 

companies should conduct regular monitoring and evaluation in order to determine how 

successfully they have implemented their various capacity building strategies. 

Keywords: Capacity Building, Insurance Sector, Enabling Factors. 

 

 

 

 

 

 

 

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INTRODUCTION 

As organizations do not function in a vacuum, they are environmental serving, which means that 

they function in an environment in which they are inextricably interlinked. The environment serves 

organizations because organizations function in an environment in which they are inextricably 

interlinked (Fisher and Surminski, 2022). Organizations are environmentally dependent for 

resources and also depend on the environment to discharge their outputs. It is this environment in 

which they operate that molds them, which in turn influences the choices they make with regard 

to strategy, and which ultimately determines how well they function. The external environment is 

highly dynamic, and it is presumed to possess some fundamental requirements and constraints, 

threats and opportunities. In order for businesses to be successful, they need to match their strategy, 

skills, and resources with these aspects of the environment. Lopez-Gunn et.al (2021) attracted 

attention to the necessity for an organization to assess the level of turbulence in its environment 

and to adapt its tactics to that level of turbulence. 

Analysis of the industry enables companies to determine the elements that contribute to their 

capacity building and to align their actions with those aspects in order to achieve a sustainable 

advantage in the marketplace. It is necessary for success in the market place to have an in-depth 

knowledge of the qualities that are unique to the sector as well as a comprehension of what makes 

the industry function. Understanding that each sector requires a unique approach to environmental 

analysis is essential to producing accurate results. According to Mazviona et.al (2017), the 

identification of the factors that enable capacity building that are specific to an industry can be 

especially useful because it allows an organization to achieve "strategic fit," which is the optimal 

match between the conditions of its industry and the activities of that organization. 

According to Eling and Luhnen (2020), no company can afford to establish a strategy that does 

not provide sufficient attention to the primary aspects that contribute to success in the sector. They 

concluded that this would be a recipe for failure. Having capabilities and initiatives that, from the 

perspective of the client, do not add "value" is a waste of time and resources. In order to fulfill the 

requirements of the consumers, the strategic capabilities should be centered on the capacity 

building aspects. In light of this, it is essential to stress that in order for businesses to develop a 

competitive edge, they need to possess competencies that are valuable to their target markets 

(Gituma and Beyene, 2018). The ability to maintain a competitive edge over time is the primary 

factor that contributes to above-average performance over the long term (Heenkenda, 2018). 

Therefore, we can say that a company has a competitive edge in the market if it produces offerings 

that have a better perceived value and/or a lower relative cost than businesses that are in direct 

competition with it. 

It is believed that changes in economic, social, political, technological, cultural, religious, and 

demographic dynamics have mutual links with the growth of the insurance industry. According to 

Tangcharoensathien et.al (2017), each and every one of these factors has been labeled as a driver 

of globalization. On the other hand, insurance companies and other financial institutions, through 

the actions of their salesforces, have a big opportunity to play a role in regaining the lost trust of 

potential clients in the services they provide. It has come to everyone's attention that trust and 

confidence play a significant role in the customer base of insurance companies. In previous 

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American Journal of Human Resource   

ISSN 2520-4697 (Online)        

Vol.6, Issue 1, pp 80 - 87, 2022   

                                                                                                                                       

                                                                      www.ajpojournals.org   

 

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investigations, evidence had been provided that was relevant to this allusion. For instance, while 

the research of Garrison et.al (2017) found that the low culture of insurance is caused by a lack of 

confidence in the insurance industry, the research of Murigu (2018) found that 70 percent of people 

don't trust insurance companies. Both of these findings point to a lack of confidence in the 

insurance industry. 

The purpose of selling insurance is aided via effective insurance activities; as a result, bonding 

relationships form between clients and insurance firms. Therefore, the activities of the salesforce 

are a perfect representation of an insurance company's expertise, capabilities, and personality 

because an insurance company is a service organization. A poorly motivated salesforce, on the 

other hand, will be costly to the organization in terms of lower performance, excessive staff 

turnover, increased expenses, higher use of the sales manager's time, and a negative effect on the 

morale of colleagues. This was stated explicitly in an earlier study conducted by Surminski and 

Oramas-Dorta (2018), which found that a well-motivated salesforce will expand more effort in the 

achievement of organizational goals, whereas a poorly motivated salesforce will be costly to the 

organization. 

Within the context of the economy's Financial Services Sector, the insurance industry is a 

significant component. In contrast to the other players, the insurance industry is facing a number 

of challenges, including diverging growth patterns in various regions of the world, a low 

penetration rate, a high insolvency rate, a poor public image, customers' demands for more 

transparent and accessible products, the revolutionization of risk analysis brought about by 

technology, customers' profiling and existing business models being put at risk, and new entrants 

looking to pick off the most profitable business. The question that needs to be answered is whether 

or not the insurance sector has truly understood the factors that enable capacity growth, or whether 

or not it needs a paradigm shift (Zelizer, 2017). The purpose of this study was to identify the factors 

that enable capacity building in the insurance sector.  

LITERATURE REVIEW 

The insurance industry has proven that it can thrive in spite of the many obstacles it must 

overcome, which is a feat that defies all chances. According to the findings of an empirical study 

that was carried out by Eling and Luhnen (2020), the establishment of a long-lasting relationship 

with one's clientele is crucial to the continued operation of the insurance sector. This provides an 

explanation for the trust that, in the minds of the customers, must be built up gradually over time. 

Creating a culture of trust, capitalizing on the power of peer recognition, and placing primary 

emphasis on the enablers and tools that assist salespeople in reaching their potential are all essential 

components of the bigger picture when it comes to more effectively motivating a salesforce. This 

is especially true in an increasingly complex business environment. 

Capacity building was defined by Aparcana (2017) as the development of knowledge, skills, and 

attitudes in individuals and groups of people that are relevant in the design, development, 

management, and maintenance of locally meaningful institutional and operational infrastructures 

and processes. Although the primary emphasis is still placed on education, training, and the 

cultivation of human resources, this strategy takes a broader view. According to this definition, 

capacity development for employees may, in a broad sense, refer to increases in the ability of all 

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American Journal of Human Resource   

ISSN 2520-4697 (Online)        

Vol.6, Issue 1, pp 80 - 87, 2022   

                                                                                                                                       

                                                                      www.ajpojournals.org   

 

83 

 

employees to do acceptable duties within the context of the organization's more comprehensive set 

of performance requirements. 

According to the United Nations Committee of Experts on Public Administration, capacity 

building can occur on three different levels: the individual level, the institutional level, and the 

societal level. These levels are listed in this order: individual, institutional, and societal. On an 

individual level, "capacity building" refers to the creation of conditions that make it possible for 

people to develop and improve upon the knowledge and abilities they already possess. In addition 

to this, it is necessary to provide the conditions under which individuals can participate in the 

process of learning and adjusting to new circumstances (Adkins, 2017). 

According to Lopez-Gunn et.al (2021), determining the factors that need to be considered in order 

to succeed in a particular market involves developing a profile of the kind of company that is likely 

to build capacity in the future industry environment. This is done in order to pinpoint the steps that 

need to be taken. Performing this step requires locating the specific recipes for success. Lopez-

Gunn et.al (2021) identified a variety of generic enabling factors, such as the ability to control 

prices and quality, deal with militant unions, maintain brand image, expand the lower end of the 

product line, and deal with the pressure of competition from other businesses. A company has a 

better chance of being successful or gaining a competitive advantage if it is aware of the steps that 

must be taken to construct the capacity in the industry that is being considered. This helps to 

determine whether a company already possesses or is capable of acquiring the necessary 

components to give it a competitive advantage over its rivals in a particular industry. Heenkenda 

(2018) cited product attitudes, competitive capabilities, and even market achievements as 

examples of enabling factors. According to Fisher and Surminski (2022), enabling factors in an 

industry are those things that determine the ability of members of an industry to prosper within 

that industry. Some examples of enabling factors include low costs, the best quality, good product 

features, resources that are available, and competitive capabilities. 

Enabling factors, as observed by Mazviona et.al (2017), are by their very nature extremely 

important to future success. Because of this, it is imperative that all organizations operating within 

the industry pay close attention to these factors; otherwise, they run the risk of falling to the back 

of the pack. How effectively the product offering, resources, and competencies of an organization 

stack up against the enabling elements of an industry will determine how financially and 

competitively successful that business will be. If a company is aware of the resources and 

competencies it must possess in order to be competitive and what it must do in order to achieve a 

sustainable competitive advantage, then it will be able to determine its enabling factors. In the 

context of the current state of the insurance sector as well as the conditions that are expected to 

exist in the future, one of the most important factors to consider when conducting an analysis or 

developing a plan is how to identify enabling factors. 

There have been previous studies that have been published in the academic literature that focus on 

the determinants that permit the performance of insurance companies. Ibarra and Securities (2020) 

conducted research to determine the elements that influence the financial success of insurance and 

reinsurance companies that are based in Bermuda. In their analysis, they examined panel data 

spanning the years 1993 to 1997. According to their findings, the amount of leverage, the type of 

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American Journal of Human Resource   

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organization, and the level of underwriting risk all have a positive and significant impact on 

financial success. On the other hand, liquidity has a detrimental influence on financial performance 

that is both considerable and noticeable, although the size of the company and the breadth of its 

operations have no bearing on financial performance. Murigu (2018) performed an analysis of the 

factors that determined the levels of profitability of 25 general insurance businesses operating in 

Poland between the years 2002 and 2009. The author used a regression model to determine the 

factors that have a positive impact on the performance of insurance companies. These factors 

include the reduction of motor insurance, the increase of other classes of insurance, the growth of 

gross written premiums, the reduction of operating costs, the growth of gross domestic product 

(GDP), and the growth of the market share of companies with foreign ownership. On the other 

hand, offering a wide variety of insurance classes has a negative impact on a company's 

profitability. 

Heenkenda (2018) conducted a study to investigate and identify the factors that affected the 

financial performance of Jordanian insurance businesses from 2002 to 2007. This research was 

carried out over the course of the period of time covered by the study. The ratio of operating 

income to total assets (ROA) served as the dependent variable, while leverage, liquidity, age, size, 

and management competence index served as the independent factors. According to the findings 

of the regression study, the financial performance of Jordanian insurance businesses is 

significantly impacted in a positive way by liquidity, leverage, the size of the company, and the 

managerial competency index. According to the findings, there does not appear to be any 

substantial correlation between the age of the company and performance. 

Tangcharoensathien et.al (2017) conducted an investigation between the years 2012 -2017 into the 

elements that influence the financial performance of 21 insurance businesses that were active in 

the Romanian insurance market. In order to accomplish this goal, the variables that were utilized 

as explanatory factors included financial leverage in insurance, company size, number of years 

spent operating in the Romanian market, growth of gross written premiums, equity, total market 

share, diversification, underwriting risk, investment ratio, reinsurance dependence, retained risk 

ratio, solvency margin, and growth of GDP per capita. The return on assets (ROA) was used as a 

metric to evaluate the performance of the company (Tax, 2020). The authors demonstrated, with 

the help of panel data techniques, that the primary factors that determine financial performance in 

the Romanian insurance market are financial leverage in insurance, company size, growth of gross 

written premiums, underwriting risk, risk retention ratio, and solvency margin. This was found to 

be the case in the Romanian insurance market. 

Zelizer (2017) looked into the cost-effectiveness and profitability of the life insurance industry in 

Thailand for his research. This study made use of data from 1997 all the way through 2002. In this 

particular investigation, the stochastic cost frontier methodology was utilized. Both the return on 

assets and the return on equity were used as dependent variables in this study. The inefficiency of 

the life insurance industry has a negative correlation with both of these measures. Gituma and 

Beyene (2018) carried out research to investigate the cohabitation of Malaysian Life insurance and 

Family takaful companies in order to examine the efficiency and organizational form of both of 

these types of businesses. A non-parametric method known as "Data Envelopment Analysis" was 

used to evaluate the technical expertise of the life insurance and family takaful industry. In order 

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American Journal of Human Resource   

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Vol.6, Issue 1, pp 80 - 87, 2022   

                                                                                                                                       

                                                                      www.ajpojournals.org   

 

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to differentiate between technical efficiency and extent efficiency, both the constant return scale 

and the variable return scale were utilized. The effectiveness of the United States life insurance 

sector is measured by Garrison et.al (2017) in terms of its profitability. The United States economy 

is significantly bolstered by the contributions made by various insurance businesses. The economy 

of the United States of America is currently one of the most robust on the international stage. 

According to what was found, the profitability of an organization has a negligible effect on the 

return on equity, which is not driven by cost efficiency. 

METHODOLOGY 

Incorporating a literature search into the work process was an important part of the project. 

Consideration for prior theoretical literature was given in the research process, both published and 

not. A literature review is the primary focus of this study, with a particular focus on the insurance 

sector's capacity-building efforts. The literature search began in 2017 and was scheduled to 

conclude in 2022. Using a variety of search terms and multiple databases, we came to this 

conclusion. Google and other search engines were used for both basic and advanced searches by 

the authors. When searching through the data, "capacity building in the insurance sector" was used 

as a search term. The phrase "enabling factors for capacity building in the insurance sector" was 

the focus of the initial Google search and the subsequent Google search. If the article or report was 

to be included, it had to be peer-reviewed, be written in English, describe the method used, and 

report the study's findings; and, finally, draw a conclusion. The following are the criteria for 

inclusion: The articles were read several times to get a sense of their content in order to identify 

the enabling factors for insurance capacity building. 

CONCLUSION AND RECOMMENDATIONS  

According to the findings, the capacity building of insurance will be significantly impacted by a 

higher employment rate, growth in personal incomes, and an overall improvement in the quality 

of life in the country. The younger and more educated generation, in particular those with adequate 

employment, will be able to afford to devote a portion of their incomes to the purchase of insurance 

products as a result of higher incomes. This will be especially true for those with adequate 

employment (Lopez-Gunn et.al, 2021). 

Education level is one of the demographic factors that is anticipated to have a beneficial impact on 

the demand for various types of insurance. It is a question whether or to what extent the insurance 

industry is being researched from all of its three aspects (economic, legal, and mathematical), so 

that citizens can understand the product that is life insurance itself. Educational systems vary from 

country to country and region to region, so this question cannot be answered definitively. A greater 

education level was associated with a higher rate of insurance penetration as well as a higher life 

insurance density. This study implies that there is a need for elevating the education level of the 

people, because it would be advantageous to boost the knowledge of financial goods that are 

presented on the market and the prospective benefits that could be gained from using them by 

potential consumers. According to Mazviona et.al (2017), people with greater levels of education 

have a better understanding of the risks involved and the significance of effective risk 

management. Because of this, knowledge does indeed make people less willing to take risks and 

boosts the demand for insurance protection. People with greater levels of education also have better 

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American Journal of Human Resource   

ISSN 2520-4697 (Online)        

Vol.6, Issue 1, pp 80 - 87, 2022   

                                                                                                                                       

                                                                      www.ajpojournals.org   

 

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earnings, and they anticipate an increase in those incomes over the long term, in comparison to 

citizens with lower levels of education, which is another factor that drives them to get insurance 

coverage. Even if the findings of many studies on the effect of education on the demand for life 

insurance are contradictory, the majority of people who carry life insurance policies are managers, 

other professionals, and self-employed individuals. In addition, one may draw the conclusion from 

this that the level of economic education is a component that makes it possible to grow capacity in 

the insurance sector. 

From the findings we conclude that the premiums for the insurance sector are influenced by factors 

such as the income per capita, the size and density of the population, demographic structures, 

income distribution, the size of the public pension system, the ownership of insurance companies 

by states, the availability of private credit, and religion. These elements, along with a number of 

others. The studies also suggest that insurance companies should conduct regular monitoring and 

evaluation in order to determine how successfully they have implemented their various capacity 

building strategies. This is essential due to the fact that the business environment in which 

insurance companies operate is quite fluid and is heavily influenced by a diverse set of 

circumstances.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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