CLAIMS MANAGEMENT PRACTICES AND COMPETITIVE ADVANTAGE OF LISTED INSURANCE COMPANIES IN NIGERIA

Abstract

Claims settlement is critical to insurance firms as it serves as a tool for compensation to policyholders who experience sudden losses which brings relief to the receiver and promotes competitive advantage of the firm if timely and efficiently managed. Despite the importance of the claims management practices, some insurance firms pay little or no attention to this process leading to poor administration and loss of clients’ confidence. This study examined the effect of claims management practices on competitive advantage of listed insurance companies in Nigeria. Survey research design was adopted. The target population of the study are the full-time top management employees of the listed insurance companies in Nigeria with a total population of 2183. A sample size of 776 was determined using Krejcie and Morgan (1970). Proportionate stratified sampling technique was adopted. A validated questionnaire was used to collect data. Cronbach’s alpha reliability coefficients for the constructs ranged from 0.772 to 0.955. The response rate was 86.5%. Data were statistically analysed using descriptive and inferential statistics. The results revealed that claims management practices have significant effect on competitive advantage of the selected insurance companies in Lagos State Nigeria (Adj.R2 = 0.808; F (5, 655) = 554.770, p < 0.05). The study concluded that Claims management practices dimensions have significant effect on firm profitability of listed insurance companies in Lagos State, Nigeria. It is recommended that the management of insurance companies in Nigeria need to embrace more innovative tools. They should particularly maintain the control processes to convince clients to continue their premium payments with guarantee returns on investment and interest which bring significant cost advantage and competitiveness.