Management of Claims Practices and Financial Performance: Evidence from Nigerian Insurers’ Firms

Abstract

The aim of this research is to verify the effectiveness of claims management practices and financial performance on Nigerian insurance companies. All insurance companies are used as the study’s population, while five (5) selected insurance companies are adopted as sample size. The use of simple random and ex-post facto adopted are used as a sampling and a research design technique respectively based on ready-made information gathered from the reports of insurers’ financial statements for ten years. The reports are tested through the multivariable regression technique. The results of the study reveal that the non-dependent parameters (net claims incurred, net claims ratio, and underwriting expense ratio) have a directly significant association with the assets’ return. The recommendations of the research are that the Nigerian insurance industry should effectively and efficiently investigate the potential genuine claims settlements from policyholders in order to appropriately settle the genuine claims as well as reduce underwriting expenses so that the positive improvement of performance of insurance organisation can be improved through the effectiveness and efficiency of cost reduction and control mechanisms. The risk management mechanism used in managing genuine claims should be prudently executed, which will not lead to poor claims settlements, in order to improve general public confidence and customer loyalty. The compulsory and association regulatory bodies should enforce strict compliance on risk management and corporate governance relating to the claims management practices of Nigerian insurance industry.