Impact of Claims Management on the Profitability of Nigerian Insurance Company: An Empirical Study of the Non-Life Insurance Sector

Abstract

Claim is the largest expenses of an insurance company. Therefore, claims management is seen as an essential tool of image boosting in insurance industry. Excellence in claims handling gives an insurance company a competitive edge over its competitors. For an insurance company, claims processing is one of its core activities. It could be said to be the main reason why insurance companies are established. Managing it more effectively and efficiently, aligning it with corporate business objectives, and achieving real-time operational awareness are high priorities of an insurance company. This is because claims processing touches all part of the organization, affecting competitive positioning, customer service, fraud management, risk exposure, cost control and Information Technology infrastructure. The objective of this research therefore, is to empirically investigate the impact of claims management on the profitability of non-life insurance companies in the Nigeria insurance industry. Hypotheses were tested to find out whether claims management is significantly related to profitability of non-life insurance companies in Nigeria. The study adopts longitudinal design which follow the same sample over time and make repeated observations; hypotheses were tested using correlation analysis. The study revealed that there is a significant relationship between claims management and the operating cost of non-life insurance companies in Nigeria. However, the study revealed that there is no significant relationship between claims management and profitability of non-life insurance companies in Nigeria. It is recommended that the claims management department should be properly structured with highly technical, trained and experience staff so as to manage the claims of insurance companies properly as a well managed claim lead to profitability through repeated purchase.