Abstract
The performance of Nigeria insurance industry has been ranked below global standards and which ranking has implications on risk management in the maritime shipping sector. In this paper, the performance and operating environment of a sample of insurance firms (with marine risk portfolios) were empirically examined. Secondary data on earned premium income, indemnity paid, management expenses and total expenses representing performance indices of these firms over a period from 1974-2013 were collected for analysis of their operational performance. Qualitative data were also extracted from existing literature for Strengths, Weakness, Opportunities and Threats (SWOT) analysis to determine the attributes of operating environment of the insurance firms. An Analysis of Variance (ANOVA) model tests on the performance indices showed that the insurance firms earned more premium than indemnity paid out during the study period. Their management expenses however, exceeded amount of indemnity paid. In terms of challenges facing the firms, the SWOT analysis revealed prevalence of poor quality service delivery to insurance customers, customer distrust, inadequate technical manpower and unfavourable macro-economic environment. Prospects for growth of the industry were found favourable due to introduction of local content policy/cabotage shipping Acts and upgraded risk management framework. The paper recommends that more specific policy interventions be directed at complete removal of impediments in the operating environment of marine insurance firms since their performance outcome has implications on viability of shipping and related maritime businesses.
Highlights
Marine insurance service drives international shipping which according to documented evidence, caters for about 90% of World trade
According to the National Insurance Commission (NAICOM), insurance penetration recorded an increase from 4.3% in 2006 to around 0.5 per cent in 2008 and dropped to 0.3 per cent in 2014; which is lower than the African average of 2.8 per cent
The secondary data analysed in the study were collected from records of insurance firms offering marine risk policy which covered their operational activities from years 1974 to 2013
Summary
Marine insurance service drives international shipping which according to documented evidence, caters for about 90% of World trade. Increasing world trade and associated shipping services have necessitated expansion in risk coverage offered by marine insurance industry. Marine risk covers are available for Artic shipping, Aquaculture farming, carbon shipping, offshore energy, cyber-attacks and maritime terrorism etc. Despite the significance of marine insurance to the shipping sector and generally the economy, the industry performance is far from being optimal [1]. Various studies articulate the problems besetting global marine insurance industry. Other studies have found financial performance of the industry to be dependent on variables as GDP, Genderrelated Development Index (GDI) [3] and economic development of a nation [4]
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