Business Model Innovation and Organizational Performance

The purpose of this study was to investigate the effect of business model innovation on the performance of insurance firms in Kenya. The study employed a descriptive and correlational research design, focusing on all 52 insurance companies in Kenya. The target population comprised general managers, underwriting managers, claims managers, and marketing managers, totaling 156 participants. A census approach was adopted due to the manageable population size. Primary data was collected using a structured questionnaire, which was pre-tested on 16 respondents from the insurance sector who were excluded from the main study. The validity of the questionnaire was ensured through face validity, while reliability was measured using Cronbach’s Alpha, with a threshold of 0.7. Data analysis involved descriptive statistics (means, frequencies, and standard deviations) to summarize data and inferential statistics (Pearson’s correlation and multiple linear regression) to examine relationships between variables. The findings revealed that value creation innovation, value proposition innovation, and value capture innovation each had a positive and significant effect on the organizational performance of insurance firms in Kenya. Specifically, value creation innovation (β=0.294, p=0.001), value proposition innovation (β=0.329, p=0.000), and value capture innovation (β=0.229, p=0.000) were all positively associated with performance. The study concluded that adopting premium discounts for low-risk customers improves retention, while using risk-based pricing models enhances market share and profitability. It was recommended that insurance firms should invest in digital platforms for customer engagement and adopt advanced technologies like Artificial Intelligence and Machine Learning to enhance claims processing and underwriting efficiency.