Moderating effect of Government Policy on the Relationship between Internal Control Systems and Financial Performance of Insurance Companies in Kenya

Abstract

This research examined the influence of government policy as a moderating variable in the relationship between internal control systems and the financial performance of insurance firms in Kenya. The study involved 58 insurance companies and utilized a combination of descriptive and correlational research designs. To assess the interaction between the study variables, multiple regression analysis was conducted. The findings revealed that government policy significantly moderated the relationship, strengthening the positive impact of internal control systems on the financial performance of the firms. Based on these results, the study recommends that improved compliance with government policy frameworks may enhance the effectiveness of internal control systems in boosting financial outcomes within the insurance sector in Kenya. It recommends that insurance companies should operate with transparency and adhere strictly to governmental regulations and standards. Operating in an open and transparent manner ensures compliance with relevant laws, strengthens public trust, and ensures long-term sustainability in the market. This strategy is expected to enhance compliance with regulatory standards and promote long-term financial stability within the insurance industry.

Keywords:       Internal Control Systems, Government Policy, Financial Performance, Companies