Diagnostic Study For The Uptake Of Group Life Insurance By SMEs - 4950 Words

Diagnostic Study For The Uptake Of Group Life Insurance By SMEs (Research Paper Sample) Content: Table of Contents TOC \o "1-3" \h \z \u Background PAGEREF _Toc496516417 \h 2Justification of the study PAGEREF _Toc496516418 \h 3Research objectives PAGEREF _Toc496516419 \h 4Research questions PAGEREF _Toc496516420 \h 4Research approach PAGEREF _Toc496516421 \h 6Target PAGEREF _Toc496516422 \h 6Data Collection PAGEREF _Toc496516423 \h Error! Bookmark not defined.Population of the study PAGEREF _Toc496516424 \h 6Population: PAGEREF _Toc496516425 \h 6Scope PAGEREF _Toc496516426 \h 7Data Collection PAGEREF _Toc496516427 \h 8Data analysis PAGEREF _Toc496516428 \h 9BackgroundSmall-Medium Enterprises (SMEs) are classified by their size which includes employee head-count, assets, and financial turnover that is below certain limits. SMEs form the lifeblood of a majority of developing (and also developed) economies, enabling faster growth and economic stability. They are considered as key engines of growth and essential for efficient and competitive markets as well as key cr eators of jobs. SMEs play a crucial part in complementing large organizations in many ways. Rough estimates show that SMEs account for around 95% of global businesses and contribute approximately 40% of GDP.According to Kenya Revenue Authority (2007), a business enterprise that employs between 10-49 and 50-99 people is considered as Small and Medium Enterprise respectively. Further, KRA (2007) noted that Small and Medium manufacturing enterprises in Kenyas manufacturing sector are defined as enterprises with fulltime employees not exceeding 100 or annual sales turnover not exceeding Kshs. 150 million.The Kenya government has on the other hand defined an SME formally registered business with between 1 to 150 employees and has a turnover of between 8 to 100 million Kenyan Shillings.The Micro and Small Enterprises (MSEs) sector plays a significant role in the Kenyan Economy. It creates employment, contributes to the Gross Domestic Product, enhances the supply chain of products and has the potential for innovations. According to the Kenya Economic Survey (2012), in 2011 the informal sector constituted 80.8% of total employment and created an additional 445,000 jobs. Given the importance the SMEs play in the economy, they are a key entry point to enhancing financial access and inclusion. As identified in the Kenya Vision 2030, efforts should be put in place to improve the financial services that would improve access by informal businesses, SMEs, youth and women groups and different categories of entrepreneurs. For significant growth to be realized nationally and in the insurance sector, there is need for an enabling environment to be created in terms of changing behavior of economic agents such as MSEs to in a more productive way contribute to prevention of risk occurrence, improved outcomes and efficiency gains in their operations. SMEs just like big corporations need to manage the risks of their employees while in their line of duty. Therefore, Group Life insura nce cover is as important to SMEs as is to big corporations. Life insurance has long been a central component of most employee benefit plans. However, with the growing expense and complexity of employer-provided health care, many organizations have focused in recent years on reducing the cost of their GLI, paying little time or attention to other strategies that can create value from those plans for both employers and employees (John L. Ehrlich). According to IRA reports, the number of insurance companies providing Group Life Insurance (GLI) in Kenya has slightly grown in the past 5 years from 22 in 2010 to 25 in 2014 with total premium of Ksh. 50,034,631 billion. Growth in GLI can be realized if SMEs insure their employees given their numbers.Group life insurance uptake by the SMEs employees is at a very low level. It is with this in mind that IRA would like to come up with practical steps to cover the Small and medium-scale enterprises (SMEs) by identifying the challenges preventi ng uptake of group life insurance among SMEs and identifying how to work on them.Justification of the studyThe research will be conducted in order to provide solutions to the low uptake of group life by SMEs considering the factors listed below:Awareness Activities: The research will provide the information needed to facilitate the implementation of changes that will promote broad insurance awareness to the Small and medium-scale enterprises (SMEs).Distribution channels: Enlighten members (insurance companies) on the best practices and methods of distributing group life insurance products to the Small and medium-scale enterprises (SMEs).Insurance Products: Provide information helpful in designing of products that best suits the needs of Small and medium-scale enterprises (SMEs).Locating SMEs: Provide practical and effective ways of getting SMEs contact details forResearch objectivesThe main objective of the study is to obtain information to guide the development of strategies to gro w Group Life insurance among SMEs. Specifically; * Benchmark the practice of Group Life Insurance for SMEs in other jurisdictions * Establish the factors that determine provision of Group Life Insurance by SMEs for their employees * Establish challenges faced in providing Group life insurance both by SMEs employers and insurance companiesResearch questions 1 Do insurance underwriters have a specific value proposition for smes? 2 Do insurance underwriters have differentiated products for SMEs? 3 Do insurance underwriters treat SMEs and corporate alike with group life scheme? 4 Do insurance underwriters have a dedicated delivery channel for SMEs? 5 Are existing group life products sufficient in addressing needs for SMEs? 6 What are the factors that influence the provision of group life insurance by SMEs for their employees? 7 What are the biggest challenges facing SMEs, Employers and insurance companies in providing Group Life Insurance products to employees? 8 What principle factors do people in formal employment consider when adopting a life insurance policy?Key information areasBenchmark the practice of Group Life Insurance for SMEs in other jurisdictions Benchmark efforts and emerging trends from other parts of the world with regards to promotional efforts; awareness and education campaigns, distribution channels and Group life insurance characteristics, and present regulations and legislation to govern group life insurance Find out the challenges that are inhibiting the uptake of group life insurance by SMEs in other parts of the world Benchmark existing distribution channels and identify the right channels to reach SMEs Establish the factors that determine provision of Group Life Insurance by SMEs for their employees Identify existing benefit programs offered by SMEs to their employees relating to group life insurance Identify group life insurance awareness amongst SMEs Indetify key factors that would determine the decision to take up group life insura nce and what are the key things that would influence the uptake of GLI Establish challenges faced in providing Group life insurance both by SMEs employers and insurance companies Investigate the awareness and educational campaigns programs targeting SMEs Identify the factors that influence the acquiring of GLI by SMEs and the factors that Insurance underwriters face in their efforts to provide GLI to SMEs. Investigate the GLI offerings in the market targeting SMEs. Research approachTargetThe research will target SMES. Although SMEs are defined as businesses that employ between 10 - 99 and have an annual sales turnover not exceeding Kshs. 150 million, only SMEs with high likelihood of purchasing group life will be interviewed in this survey. This implies that the survey will use judgmental sampling in selecting the SMEs to be interviewed. Only SMEs that currently employ a minimum of 10 employees on permanent or contract basis shall be considered. The SMEs will further be categorize d into various sectors namely: transport, manufacturing, hotels/ real estate, agriculture, education, trade, communication, construction, tourism, energy, finance etc.The study will adopt a descriptive and cross-sectional survey research design. Cooper and Schindler (2003), define descriptive survey as being concerned with finding out who, what, where, when and how variables. Cross-sectional studies form a class of research methods that involve observation of all of a population, or a representative subset, at one specific point in time.Cross-sectional studiesare simple in design and are aimed at finding out the prevalence of a phenomenon, problem, attitude or issue by taking a snap-shot or cross-section of the population. This obtains an overall picture as it stands at the time of the study.This study will utilize a mix of the descriptive research design and the cross-sectional research design. as it will allow the use of the findings of the study, as a general reflection of the la rger population.Population of the studyPopulation:Cooper and Schindler (2001) define population as the total collection of elements about which we wish to make some inferences. The population of this study is drawn from the total population of SMEs with at least 10 permanent employees in seven industrial towns around the country which is estimated to be 10000.The proposed quantitative sample for this survey is 330 SMEs. The sample size for in-depth interviews will on the other hand be ...