The Moderating Role of Regulatory Reforms in the Relationship Between Financial Stability Factors and Underwriting Performance of Insurance Companies in Kenya

Abstract

This paper examines whether regulatory reforms moderate the relationships between financial stability factors and the underwriting performance of insurance companies in Kenya. The study uses an unbalanced panel of 567 insurer-year observations from 57 licence units over 2014–2024. Fixed-effects panel regressions with company-level-clustered standard errors examine capital adequacy, claims-provision intensity, premium growth and reinsurance, together with their interactions with a researcher-constructed regulatory-period score. Findings: The four interaction terms were not jointly statistically significant (F(4, 56) = 2.32, p = 0.068); therefore, the null hypothesis was not rejected at the 5% significance level. This indicates insufficient evidence that regulatory reforms jointly moderated the relationships between the financial stability factors and underwriting performance. The common ordinal reform score cannot isolate individual reforms or insurer-specific exposure; the short panel and the 2023 adoption of IFRS 17 further limit interpretation. The life-insurance underwriting measure is a study-specific proxy. Regulatory evaluation should distinguish implementation milestones from underwriting outcomes and use reform-specific, insurer-level exposure measures. Insurers should monitor capital, technical provisions, premium growth and reinsurance.