EFFECT OF GENERAL INSURANCE COST OF CLAIMS ON THE GROSS CLAIMS OF INSURANCE BUSINESS NIGERIA PERSPECTIVE
Article Sidebar
Main Article Content
Abstract
This study examined the Effect of general insurance cost of claims on gross claims of insurances industry in Nigeria. The motive of the work is anchored on the gap in the empirical where average cost per claims has not been used to evaluate the effect of cost of claims of general insurance policies on the gross claims of insurance industry in Nigeria. The main objective is to appraise the effect of general insurance cost of claims on gross claims of general insurance business in Nigeria. The specific objectives are to determine the average cost of motor, general accident, and oil/gas insurances claims (independent variables) on the gross claims paid (dependent variable) by insurance firms in Nigeria. Ex-post facto research design was adopted while secondary data were sourced from CBN and NAICOM respectively. Auto regressive distributed lag (ARDL) model was employed in analysis. The investigation revealed that the impact of motor insurance claims and oil/gas insurance claims were positive and significant at (P-value of 0.00003 < 5% and a coefficient value of 4.16) and (P-value of 0.0085 > 5% and a coefficient value of 0.13) respectively. Similarly, general accident insurance claims was negative and significant at (P-value of 0.0010 < 5% and a coefficient value of -3.87). The implication of the finding is that the cost of settling motor and oil/gas claims is positive and significant while general accident insurance claims is negative and significant. The study concluded that motor and oil/gas insurance policy claims have positive and significant impact while general accident had a negative and significant impact on the dependent variable. The study recommends among others that insurers should develop a mechanism to mitigate fraud within the claims department. Consequently, insurers should be stringent and closely monitor losses and recovery with respect to general accident insurance given the time and its nature, and equally, insurers should form pools to underwrite oil/gas insurance in collaboration with loss adjusters to tap from expanded expertise skills.
Downloads
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
References
Adebisi, W. (2006). Principle and Practice of Insurance, Ondo, Adefemi Publisher
Agbo, I. U. & Agbaji, B. C. (2019). Effect of Motor Insurance Claims Settlement on Insurance Penetration in Nigeria, International Journal of Research in Management Fields 3(4) www.http://rspublication.com/IJRMF/IJRMF.html
Ajemunigbohun, S. S. & Oreshile, A. S. (2014). Risk Attitude and Demand for Motor Insurance: An Examination of Selected Motorists in Lagos State, Nigeria, Developing Country Studies 4 (21), 144-154
Alina, I. (2008). Eva as the Best Financial Performance Measure: the Theory of Reality. https://www.grin.com/document/124462. Retrieved 1/06/2021
Alma, C. & Rajeev, D., (2004).The Effect of Automobile Insurance and Accident Liability Laws on Traffic Fatalities * Forthcoming, Journal of Law and Economics
Awunyo-Vitor D. (2012). Comprehensive Motor Insurance Demand in Ghana: Evidence from Kumasi Metropolis, Management, 2(4)
Ayuba B., Isyaka, M. S. & Agugua, A. G. (2018). Impact of Claim Settlement On Performance Of General Insurance Businesses: Evidence From Federal Capital Territory, Abuja. International Journal Of Management Science Research, 4 (1) https://www.ijmsr.net
Batool A, & Sahi A., (2019). Determinants of Financial Performance of Insurance Companies of USA and UK during Global Financial Crisis (2007–2016). International Journal of Accounting Research, Int J Account Res 7(194)
CIIN (2003). General Insurance Business (Ne), Study Course IF2, Printed and Collated in Great Britain
CIIN (2004). Insurance Underwriting Process (Ne), Study Course CF3, Printed and Collated in Great Britain.
Economictimes, (n.d.). Definition of General Insurance, Assessed on 1/06/2021 from https:/www.economictimes.Indiatimes.com
Eduproject (n.d.).The Impact of Motor Insurance Policy on the Growth and Development of the Economy (A Study Of Nicon Insurance). Retrieved 10/07/2021 from https://eduprojecttopics.com/product/
Efiom-Ekaha I. E., (2009). Oil and Gas Industry Operation and Loss Control in Nigeria, Stephen Adesean Printing Press.
Ejide A. O.&Tsowa I. L, (2010). Ethical Issue: A Problem in Nigeria Insurance Companies, Master’s Thesis in Business Administration Spring 2010, School of Management, Blekinge Institute of Technology Sweden http://www.bth.se/fou/cuppsats.nsf/
Enche, A., Enwereuzor, C. O. R., Ibeabuchi, H., Nwite, S. C. & Ogwo, S. A., (2005). Insurance Basic Principle and Practice, Enugu, Immaculate Publication Ltd.
Eze, O. R. and Okoye V., (2013). Analysis of Insurance Practices and Economic Growth in Nigeria, Global Advanced Research Journal of Management and Business
Studies 2(1). http://garj.org/garjmbs/index.htm
Faculty and Institute of Actuaries, (1997). Methods Based on Claim Numbers & Average Cost Per Claim, Claims Reserving Manual V.1 Section h. Retrieved on 30/05/2021 from https://www.actuaries.org.uk
Guidingmetrics (n.d.). Insurance Industry 18 Most Critical Metrics. https://guidingmetrics.com
Hall, C.E (1985). Property & Pecuniary Insurance, Study Course 060, The CII Tuition Service Burington Press (Cambridge) Limited Foxton
Insurance Act 2003, Act No. 1 An Act to Produce A New Insurance Act, Enacted by The National Assembly of The Federal Republic of Nigeria.
James, M. (2020). The impact of Covid-19 on Motor Insurance, Retrieved on 12/07/2021 from https://www.cii.co.uk/news-insight/news/articles
Kagan, J., (2021). Car Insurance, Third Party Insurance, Retrieved on 1/6/2021 from https:/www.investopia.com
Klipfolio, (n.d.). Average Cost Per Claim: KPI Examples Insurance Metrics and Kpis, Retrieved on 30/5/2021 from https://www.Klipfolio com.
LawTeacher, (2015). Third Party Motor Claims In Indian Insurance; Retrieved April 19, 2015, from http://www.lawteacher.html.
Lee, C. Y. (2014).The Effects of Firm Specific Factors and Macroeconomics on Profitability of Property-Liability Insurance Industry in Taiwan, Retrieved September 28, 2015, from Asian Economic and Financial Review
Lucey T, (2002). Quantitative Techniques 6th Ed, China, Printed by C & C.
Mark, M, (2012). Improving the Insurance Claims Management Process, GIS, Best Practice and Services
Microsoft Encarta, (2009). Performace. Retrieved on 30th April, 2021 https://dictionary.cambridge.org/dictionary/english/performance
Mwangi, M. & Murigu, J. W., (2015). Determinants of Financial Performance in General Insurance Companies in Kenya, European Scientific Journal Ed 11,
Nielson, N. L, "Insurance." Microsoft Encarta, (2009). Online encyclopedia
Nigeria Insurance Commission, (2011). Annual Report and Audited Account, 31st December, 2011. http://www.naicom.gov.ng.