It is the expectations of good corporate governance that the managers take stock of the risks their respective businesses are exposed to so as to put in place both preventive and control measures. In light of this, there is a wide spread customer dissatisfaction in the life assurance subsector on account of persistency as brought to the fore by the persistency rates posted by the Insurance Regulatory Authority (IRA,2016). This is partly due to the fact that the reputation of the industry has been eroded over the years as a result of both perceived and actual malpractices. This study was anchored on the postulate that a critical understanding of factors that affect persistency is indispensable in life assurance subsector. These factors were grouped into three broad categories namely: underwriter factors; intermediary factors; and policyholder factors. Empirical analyses of how these factors individually and collectively affect persistency are useful not only in understanding the complex concept of persistency but also in predicting the likelihood of lapsation. The study focused on the life assurance companies since they are considered to be better placed to understand the causes of lapsation. A structured questionnaire for the collection of quantitative data was presented to 47 respondents being 24 underwriting managers and 23 marketing managers of life underwriters in Kenya. The main statistical procedures for the analysis of quantitative data were descriptive statistics such as frequency distribution and percentages and dispersions. Inferential analysis was carried out using correlation analysis and regression analysis. Correlation analysis was employed to establish the relationship that exists between independent variable and the dependent variable. The study found that that underwriter factors have no signficant effect on persistency of ordinary life assurance policies in Kenya. In addition, the study revealed that intermediary factors have no signficant effect on persistency of ordinary life assurance policies in Kenya. The study established that policyholders factors have a statistically positive effect on persistency of ordinary life assurance policies in Kenya. Also, the study found that underwriter, intermediary and policyholder factors jointly have a significant effect on persitency of ordinary life assurance policies. However, while policyholders factors significant affect persitency of ordinary life assurance policies, Underwriter and intermediary factors have no signficant effect. The study recomemnds that since customers for Individual life assurance policies come from different sectors of the economy and get income at different times of the year, insurance companies should provide monthly, quarterly, bi-annual and annual premiums for their customers. In addition, insurance companies should focus on professional certificates, experience, ethical conduct and customer service training in the selection and vetting of intermediaries. In addition, insurance companies should provide training on intermediaries, at least twice in a year, on customer service and ethical conduct. Further, insurance companies should categorize their customers as per their demographic characteristics and offer individual life assurance policies that are affordable and convenient. In addition, insurance companies should embark on campaigns to increase awareness on Individual life assurance policies among clients.

Background of the Study 
The life assurance industry has gone through several periods of transformation instigated by changes in consumer needs. Life assurance as a concept can be traced to the ancient days of Roman Collegial. The medieval guilds imposed special dues on their members and the amounts thus collected were paid to dependents of deceased members. However, life assurance as practised began in the US in the late 1760s when the Presbyterian Synods in Philadelphia and New York created the corporation for relief of the poor and distressed widows and children of Presbyterian Ministers. Subsequently, the Episcopalian priest organized a similar fund in 1769, and between 1787 and 1837, a number of life assurance companies were started although a number of them did not survive (Black and Skipper, 2005). 

In general terms, life assurance is a way of dealing with risk and a saving medium for consumers. It also plays important psychological and social roles. As Hofstede (1995 cited in Makau, 2013) stated, the major function of life assurance is to protect against financial loss from loss of human life. Besides covering the risk of death, it also covers the risks of disability and critical illness. It can therefore be argued that the purpose of life assurance is to provide peace of mind by assuring that financial loss or hardship will be lessened or eliminated in the event of the insured person‗s death or incapacitation or critical illness. Masinga (2005) posits that life assurance provides cover to an individual policyholder against ill health, disability, premature death and financial stability in old age. 

Ordinary life assurance policies are of many variations but they can be grouped into three main types as outlined by George (2003). The three types according to the author are Term insurance, Whole life insurance and Endowment insurance. Term assurance offers a specified amount of life insurance protection for a specified time period. It provides protection for mortality risk within a given period of time. Term life insurance is the simplest type of life insurance (George 2003). In case the policyholder passes on while the policy is still in force, the company will pay the face value of the policy. But if he/she outlives the duration of the contract, the policy expires and nothing is paid. It is among the less costly forms of life insurance being offered in numerous varieties. 

Whole life assurance policy is a permanent policy which offers security for a lifetime. It pays the recipient anytime death happens. Premiums may be paid for a specific period or through out the life time of the assured. On the other hand, endowment assurance policies are basically savings contracts that contain pure protection components such that a certain specified sum of money is paid either at the expiry of the term or the death of the policyholder, whichever comes first. 

Policy lapsation is primarily the result of policyholders either voluntarily or involuntarily failing to remit their periodic premiums when they fall due (Subashini & Velmurugan, 2015). This may largely be attributed to among other factors, poor sales practices as well as poor customer service. Insurers calculate persistency in two ways. The first is to calculate persistency on a cumulative balance basis, whereby the insurer uses a given year as a base year (Vankayalapati, 2017). For instance, suppose an insurer issued 10,000 policies in a given year. Out of the 10,000 policies, say 2,000 are terminated during the first year, and then the persistency for that portfolio will be 80%. If a further 2,000 policies are not renewed after the second year, the persistency will drop to 60%. If after 3 years, the only policies in force are 5,000, then the persistency for that period will be 50%. This is on the account that the first year is used as the base year for these workings. 

The second method of calculating persistency is called, reducing balance. Here, persistency is calculated on the basis of the preceding year as opposed to the base year. Using our earlier example, the 13th month persistency will still remain at 80%, but the 25th month persistency will be 75%, that is, 6,000policies out of 8,000 policies. The 37th month persistency will be 83.3%. The problem with the reducing balance method is that firms with poor persistency can be shown in better light (Sane, Thomas, & Halan, 2013). 

Poor persistency remains a key issue to life assurance industry. Most insurance companies in Kenya have some form of customer retention programs in place but these measures have had little impact on the persistency question. This is because most of these programs have focused more on reactionary rather than proactive measures that address the real drivers of persistency. One of the programmes put in place by a number of insurance companies is a ―claw-back‖ program. Under this program, the commissions paid to the intermediary are recalled by the insurer upon the lapsation of the specific life assurance policy. The clawback clause help insurers recover a part or all of the commission paid to agents if the policy was cancelled within a given period. 

The challenge with this approach is that it considers the intermediary as the sole driver of persistency. The approach assumes that the reason the policy lapsed is a result of misselling on the part of the intermediary (Sane et al., 2013). Keeping in mind that there are many other causes of poor persistency, then, this approach becomes counterproductive. 

The other strategy employed by insurers is the development of single premium policies. Here, the insured does not pay periodic premiums but pays one premium to cover the entire insurance period. Employment of this strategy has had a low uptake from the market due to the fact that not many potential life assurance policyholders in developing countries have sufficient lump sum amounts that can be set aside for the purpose of life assurance. Another strategy that has been effectively employed by insurers is the use of automated premium remittance method (Vankayalapati, 2017). Using this method, premiums are deducted on specific dates at source. This source can either be from the policyholder's salary or from the policyholder's bank account. These strategies are insufficient because the focus is limited in scope as portrayed by the literature. This therefore means that the life assurance persistency question will not be addressed conclusively without interrogating the factors brought forth by the three key players in the life assurance supply chain, namely; the underwriters, the intermediaries as well as the policyholders (Limra, 2012). 

Persistency in life assurance refers to the proportion of an insuarnce company‘s already written policies remaining in force without lapsing or being replaced by policies of other insurers. This therefore means that when working out the persistency rate in life business, the focus is on the number of policies in force against those that were issued.. According to the global standards, minimum persistency rate for policies in the first year is 90%, 85% in the second year and 80% in the third year. 

Persistency has been a difficult issue for life insurers across the world, as it can result in increased pressure on revenue and reduced profitability. While life insurance companies have taken various initiatives to reduce lapsation rates, customer persistency towards insurers continues to be a deep-seated concern with no quick fix solution. It is a complex issue dictated by a combination of factors. Some of these include the macroeconomic environment, product design, policy size, age and gender of policyholder at time of purchase, mode and method of payment, policy duration, interaction with the insurer, relationship with the agent, and current life value of the policyholder. 

Factors Affecting Persistency of Ordinary Life Assurance Policies 
Several issues have been identified as underlying the poor persistence of life assurance policies in Kenya, and world in general. There is awareness of insurance in general among the insurable population but a large proportion lack a proper understanding of what insurance is and the impact it may have. Most of the already insured respondents cited a lack of interest in reading policy documents especially if a claim does not occur at all (Agar, 1980). 

The insurance industry is affected by the persistent poor public image which has caused distrust among potential customers (Chandran, 2004). This is due to lack of structured branding initiatives and the reliance on intermediaries who may shift their negative image to the insurance companies they represent and to the industry as a whole. The financial market is flooded with unique innovations in the financial services sector. However, the insurance services are progressing at a slower pace in terms of new products, mode of payment or target markets, thus leading to the perception that the products are not unique or modern (Diacon, Carter, 1984). There is a low product differentiation where insurance companies are perceived to be using products designed for other markets and applying them to the Kenyan markets without significant adaptation to the local environment (Mutiga, 1999). Further, there is inadequate differentiation between products from different insurance companies, making it difficult for consumers to distinguish between competitor offerings in terms of product features, customer service, staff competence, and channel or promotion strategy. Customer satisfaction: according to Katz (1960) the standards of service delivery among many insurance companies are still low and the focus on the customer has not yet been embraced fully in the industry as it has in the competing financial services. Customer satisfaction therefore has remained low. Inaddition, there is less focus on brand development, management and measurement (Severin, and Tankard, 1997). This lack of focus on building brand awareness, perceived quality, brand associations and brand loyalty means that insurance products in Kenya have a high commoditization level which leads to low emotional appeal. 

These factors among others can be attributed to the main stakeholders in the insurance industry. These are; the life underwriters, the intermediaries, the policyholders and lastly the regulator, which in essence is the government. 

The Insurance Sector in Kenya 
The history of the development of commercial insurance in Kenya dates back to the colonial period where Kenya was colonized by the British. The colonial powers sought to extend the operations of their home companies into their newly acquired territories. This started as agency offices which later became branches and eventually grew into fully fledged insurance companies (Makau, 2013).With this development, there was need to regulate the insurance industry and this led to the enactment of the insurance Act Cap 487 that came into effect in 1987. Over the years, the Act has been amended to align Kenya‘s insurance industry to the global standards. By the end of 2016, the insurance industry in Kenya had grown with a wide range of players in the market that include, Insurance companies, reinsurance companies, insurance brokers, insurance investigators, motor assessors, loss adjustors, risk managers, insurance agents and banc assurance insurance agents (IRA, 2017). The banc assurance model entails the insurance companies partnering with banks and other financial institutions as third parties to distribute their insurance products. This is on the strength that these institutions have a wide network of customers who are potential consumers of insurance products.

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