The Relationship Between Effective Claims Management And The Growth Of Nigerian Insurance Industry

The Relationship Between Effective Claims Management And The Growth Of Nigerian Insurance Industry

Chapter One

Preface

Background of the Study

The history of insurance assiduity in Nigeria according to Augustine and Bamidele( 2013) could be traced to the British social trading companies that established agency services in Nigeria, on behalf of insurance companies in UK. After the Nigerian political independence of 1960, indigenously possessed insurance companies sprang up, which as a result of inadequacy of capital, were unfit to pay claims as at when due. This inadequacy of capital coupled with lack of specialized and directorial skill, poor insurance nonsupervisory frame, brought confidence extremity and strong apathy to insurance purchase in Nigeria( Augustine and Bamidele, 2013).

Insurance assiduity has been honored encyclopedically as a motorist of profitable growth and development. The assiduity provides fiscal security to policy holders, through the pooling and investment of decorations out of which those who suffer unanticipated losses are remunerated( Unachukwu, Afolabi, Alabi, 2015).

A claim payment is the defining moment in the relationship between an insurance company and its client. It’s the chance to show that the times spent paying decorations were worth the expenditure. From a marketable point of view, claims payment represents the largest single cost to insurers and 80 percent of all decorations are spent on claims payment and associated running charges( Butler and Francis, 2010 cited in Yusuf and Dansu, 2014).

An effective and prompt claims agreement by insurance companies has been linked as a tool that has the implicit to enhance the growth of the assiduity( Unachukwu, Afolabi, Alabi, 2015). Hence, Parsons( 2005) asserted that one of the top functions of insurance is the agreement of claims.

Claims agreement is the financial compensation that’s paid to the policyholder in the event of aloss.However, it can blemish its image and hence affect the deals and marketing of its insurance products, If a company doesn’t effectively handle its claims service. Insurance company’s station to claims agreement has in the history provoked a lot of public review and indeed attracted the attention of governments( Harry, 2012).

Claims operation needs to be balanced with cost effective processes, for which effective data operation systems are pivotal for using claims data in order to ameliorate products and services( Rendek, Holtz and Fonseca, 2014).

also, since insurance is generally an impalpable product for guests until they admit a payment for an insured loss, the claims experience can thus significantly impact the guests understanding of and satisfaction with insurance. A positive claims experience may affect in a long- term customer and champion of the insurance programme. A negative experience, on the other hand, can lead to distrust and policy termination. Claims operation is thus an integral part of an insurer’s trouble to give good client service and to retain guests( Barry, 2011).

Claims operation includes all directorial opinions and processes concerning the agreement and payment of claims in agreement with the terms of insurance contract( Redja, 2008). still, strengthening of claims departments, according to OECD( 2004), involves effective claim procedures or operations which include claims reporting, claims assessment, claim processing, fraud discovery and complaints and disagreement agreements. But despite the below, claim agreement has noway been without some interruptions for utmost insurance companies in Nigeria.

also, a company which fails to effectively settle claims to the satisfaction of guests, would surely attract lower business, as it’s likely to discourage similar guests from continuing to ensure with the company. similar guests might indeed advise their musketeers, associates and relations not to patronize such a company( Onosede, 2013). Hence, this study explores the relationship between effective claims operation and the growth of Nigerian insurance assiduity.

Statement of the Problem

The significance of claims operation to the growth of the insurance assiduity in Nigeria can not be exaggerated, but despite the part played by the insurance assiduity to individualities, businesses and profitable development of the nation at large, it’s dejecting to note that the insurance assiduity in Nigeria is still largely underdeveloped.

effect to this unwholesome development, Omar( 2005) identifies lack of trust and confidence in insurance institution, poor claims operation, lack of dependable actuarial data for exploration and underdeveloped fiscal request as some of the backups to the growth of the insurance assiduity in Nigeria.

Managing claims effectively is a complex task. Despite its numerous way and variations in each process, utmost Nigerian insurance companies struggle to constantly ameliorate claims operations. This may not be unconnected with the poor claims process andnon-recognition given to the staff of the claims department in the assiduity.

An insurance company is principally set up like other profit- acquainted assiduity for fiscal earnings while rendering essential services to their guests. But in recent times poor running of claims has been a major debit to performance of insurance companies. The imminence has been so current that numerous policyholders in Nigeria frequently contemplate terminating their programs in the face of the insurance companies not compensating them on account of losses suffered.

The introductory challenges to claims operation and its attendant effect on insurance growth in Nigeria ranges from; hamstrung and ineffective claims assessment and processing, poor claims agreement procedure looking at the claims paid and its goods on overall profit made by insurance companies, incapability of insurance companies to remain solvent in order to settle claims as at when due, and disagreement agreements that leave guests largely unsatisfied.

Hence for the insurance assiduity to be well patronized and contribute its anticipated ideal of marshaling financial means from the fat profitable agents and channelizing the same to areas of deficiency and effective uses in the ultramodern business frugality of Nigeria, effective claims operation becomes sacrosanct. It’s against this background that this study seeks to examine the relationship between effective claims operation and the growth of the insurance assiduity in Nigeria.

Objects of the Study

The main purpose of this study is to probe the relationship between effective claims operation and the growth of the insurance assiduity in Nigeria. Other salient objects are

explore the relationship between claims operation and insurance companies ’ underwriting.

examine the effect of claims agreement on demand for insurance.

Exploration Questions

The study will be guided by the following exploration questions

1. Is claims agreement a significant predictor of insurance companies ’ underwriting?

2. What’s the correlation between claims agreement and demand for insurance?

Exploration Hypotheses

In the course of the study, the experimenter will test the following suppositions

thesis One

Ho Prompt claims agreement isn’t a significant predictor of insurance companies ’ underwriting.

Hi Prompt claims agreement is a significant predictor of insurance companies ’ underwriting.

thesis Two

Ho There’s no significant relationship between claims agreement and demand for insurance.

Hi There’s a significant relationship between claims agreement and demand for insurance.