IMPACTS OF CLAIM SETTLEMENTS ON PROFITABILITY IN THE NIGERIAN INSURANCE INDUSTRY

ABSTRACT

In the past, insurance companies hardly thought of how best to manage genuine claims and this led to the creation of a bad image for the insurance industry. An increasing number of insurance companies in recent years coupled with the declining purchase of insurance policies has forced companies to work on better methods of managing claims.

I delved into this study in order to aid readers identify some of the problems militating against adequate settlement of claims. The data used for this research was carefully collected through extensive field work and the instrument used in collecting the data were questionnaires.

The research was carried out in the Lagos metropolis alone where most of the insurance companies have their head offices. The research was however not easy as I encountered a few problems in collecting data.

Four hypotheses were formulated and were treated with chi-square method, all tests were conducted at five percent level of significance. Two hypotheses were accepted while two were rejected based on the findings of the study. It was found that over fifty percent of insurance claims presented are fraudulent in their nature. It has also found that it takes an insurer up to five months or more to settle a reported claim. After due investigation, it was also found that the insured’s attitude during the period of claim settlement has no effect on claim settlements.

TABLE OF CONTENTS

CONTENTS                                                                                         PAGE

Title/Cover page                                           i                                   

Declaration                                              ii                       

Certification                                                                iii                               

Dedication                                                                iv                               

Acknowledgements                                                         v                           

Abstract                                                                      vi                           

Table of contents                                                           vii                                

CHAPTER ONE

INTRODUCTION                                      

1. Background of the Study                                      1               

2. Statement of the Problem                                                      2

3. Aim & objectives of the study                                               4

4. Scope of the study                                                                          5

5. Research questions                                                                7

6. Significance of the study                                                             7

7. Limitations of the study                                                                8

8. Basic assumptions                                                       8

9. Definition of terms                                          9

CHAPTER TWO

LITERATURE REVIEW

1. Introduction                                                                                   11

2. General review of existing literature on the impacts of claim

settlement on profitability in the insurance industry                          11

1. Classes of Insurance                                    12   

2. Principles of Insurance                                                                                        14

3. The image of claims in the insurance industry                    15

4. Notification and investigation of claims                        16

5. Claims settlement procedure                                16

6. Essential elements for a successful claim                         19

7. Conditions to be satisfied for a successful claim                    21

8. Methods of claim settlement                                26

9. Impediments to prompt and equitable claims settlement                27

10. Overview, regulatory and supervisory framework of life insurance in Nigeria 29

11. Problems affecting claim settlement in Nigeria                         31

12. Insurance claims fraud                                    32

13. Claims administration and E-commerce                        33

14. The outsourcing of claims services                            33

CHAPTER THREE

RESEARCH METHODOLOGY

1. Introduction                                                      34

2. Research Design                                                                                                 34

3. Research Hypothesis                                    35

4. Study Population                                                                                                   36

5. Sample size and technique                                                                             36

6. Data collection and Instrumentation                                                                   37

7. Method of data analysis                                    38

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

1. Introduction                                                                                                        39

2. Analysis of questionnaire A (Administered on the public)                                39

3. Analysis of questionnaire B (Administered on staff of insurance                          claims department)                                              47

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

1. Summary                                                                                                            51

2. Conclusion                                                                                                          52

3. Recommendations                                                                                              53

References                                            56

Sample of questionnaire A                                58

Sample of questionnaire B