Effect of Innovation Strategy on Performance of Insurance Industry in Kenya

The study examined the effect of innovation strategy on performance of insurance industry in Kenya with firm size as the moderating variable. Innovation was operationalized by; product innovation, process innovation and business model innovation. The study was anchored on innovation diffusion theory and resource-based theory. The study employed descriptive cross sectional research design. The target population was 504 top and middle managers from all the 56 insurance companies licensed by insurance regulatory authority by year 2023. The study adopted stratified random sampling technique, with a sample size of 218. Primary data was collected using semi- structured questionnaires. Secondary data was collected on return on asset (ROA), return on equity (ROE), customer satisfaction index (CSI), total sales, total assets and market share. Pearson’s correlation coefficient was used to indicate the direction of relationship between variables. Multiple regression analysis was used to explain the nature of relationship between variables, F- statistics was used to decide the suitability of the model and beta coefficients to for test hypothesis while R2 was used to determine the model goodness of fit. The study findings indicated that innovation strategy had a positive significant effect on performance of insurance industry (p< .05). The study also revealed that inclusion of firm size as a moderating variable had a positive significant effect on relationship between innovation strategy and performance of insurance industry (p< .05). The study concluded that innovation strategy contributed to the industry performance. The study recommended the need for insurance companies to invest in innovative business model, processes and products, particularly through technology to simplify policy structures and improve customer service and accessibility.