Nigerian Insurance Industry Research Articles

How Firm Characteristics Affect the Timeliness of Financial Disclosures in Nigerian Insurance Firms

Increasing the relevance of corporate financial statements to decision-making processes necessitates rapid availability of financial information to users. This study delves into the timely reporting practices of Nigerian insurance companies over a twelve-year period, spanning from 2009 to 2021. Through an examination of firm characteristics such as size and age, alongside the timeliness of financial reports measured by audit report delay, this research sheds light on the intricate dynamics influencing financial reporting practices within the Nigerian insurance sector. Utilizing advanced statistical analysis techniques including fixed effect modeling and diagnostic tests for data normality and heteroskedasticity, the findings unearth compelling insights. Notably, while firm size exhibits a significant negative impact on financial reporting timeliness, the influence of firm age proves to be less straightforward, indicating nuanced factors at play. This study underscores the imperative for insurance companies to bolster their asset bases, thereby enhancing their capacity to mitigate delays in financial reporting. By elucidating the interplay between firm characteristics and reporting timeliness, this research offers actionable recommendations to fortify the integrity and efficiency of financial reporting practices within the Nigerian insurance industry.

Examining the Influence of Risk Management Committee Dynamics on Financial Performance: A Case Study of Listed Insurance Companies in Nigeria

The Nigerian insurance industry has experienced substantial growth due to factors like increased awareness, regulatory reforms, and technological advancements. This research aimed to explore how the composition, structure, and activities of risk management committees influence key financial performance metrics, focusing on return on assets (ROA). Data from annual reports and audited financial statements of selected insurance companies listed on the Nigerian Exchange Group from 2013 to 2022 were analyzed using both descriptive and inferential statistics. The study revealed that risk management committee size and meeting frequency positively impact financial performance, suggesting that larger committees and more frequent meetings correlate with better financial outcomes. However, factors like committee independence and gender diversity had insignificant effects on financial performance. In conclusion, the presence and effectiveness of risk management committees significantly affect the financial performance of listed insurance companies in Nigeria. The study recommends that insurance companies prioritize diverse committee compositions to benefit from a wider range of expertise and perspectives.

Fire Risk Transfer and the Nigerian Economy (1999-2019)

This study was conducted to assess fire risk transfer and its impact on the Nigerian economy over the period 1999 to 2019. It was borne out of the incessant fire outbreaks in the country in recent times which has led to an increase in fire risk premiums in the Nigerian insurance industry. The specific objectives were to investigate the trend of fire risk premium and real gross domestic product (RGDP) and assess the impact of fire risk premium on RGDP in Nigeria. The ex-post facto research design was adopted and the population consisted of all insurance companies covering fire risk as of 2019. Data were sourced from Nigeria Insurance Digest, the Central Bank of Nigeria statistical bulletin and the National Bureau of Statistics covering the selected years. The dependent variable for the study was RGDP while fire risk premium, exchange rate and money supply were independent variables. The trend analysis revealed that fire risk premiums increased at a faster rate than RGDP. while the regression analysis indicated a positive significant relationship between fire risk premiums and RGDP, and negative relationships between exchange rate and RGDP, as well as between money supply and RGDP. It was recommended that fire risk transfer should be encouraged for individuals and organizations to enhance its continued contribution to economic growth.

The effect of non-audit services on audit quality

Audit quality (AQ) is value-relevant if the information is capable of making a difference in the decisions taken by various stakeholders. Therefore, the provision of non-audit services (NAS) to clients, and auditors can create economic bonding and self-review threats that compromise independence and AQ (Friedrich & Quick, 2023). The study investigates the effects of NAS on AQ in the Nigerian insurance industry. The ex-post facto research design was adopted and data were sourced from the annual reports of the 22 insurance companies listed on the Nigerian Exchange Group (NGX) between 2015 and 2020 and sampled through a filtering method. The study used descriptive statistics, correlation matrix, and binary regression techniques to test the formulated hypotheses. The study made use of a binary logistic econometric approach because the dependent variable is a dummy variable assuming the value of “1” and “0”. In agreement with the study of Pappert and Quick (2022), the regression results revealed that the provision of NAS, audit fees, and firm size significantly affect AQ in the Nigerian insurance industry, while auditor tenure had an insignificant effect on AQ. The study recommended that the provision of NAS should be strengthened and monitored to align with the list of services that auditors are not prohibited from rendering to the client.

Enterprise Risk Management (ERM) in the Nigerian Insurance Industry

The study looked at how Nigerian listed insurance companies performed in terms of enterprise risk management. The ex post facto research design was used in the study. According to Nigeria Stock Exchange data as of December 30, 2021, there were 23 insurance businesses listed on the Exchange (NSE). Ten Nigerian insurance firms made up the sample size. In choosing the selected firms, we used the convenience sampling approach. The sample firms’ financial statements and annual reports were used to collect data for the study. The statutory audit of the financial accounts served as the foundation for validity and reliability. Inferential (multiple regressions) and descriptive statistics were used to analyse the data. The results showed enterprise risk management has no significant impact on listed insurance companies in Nigeria’s earnings per share; return on asset of listed insurance companies in Nigeria; or return on equity of listed insurance companies. According to the study’s findings, enterprise risk management has little or no financial impact on Nigeria’s listed insurance businesses. The research proposed that risk committee meetings be held regularly in order to improve performance and that members of the committee should be proficient in managing risk-related issues. It also advised that the committee be allowed its independence to operate.

Enterprise risk management in the Nigerian insurance industry

The study looked at how Nigerian-listed insurance companies performed in terms of enterprise risk management(ERM). An ex post facto research design was used in the study. According to Nigeria Stock Exchange (NSE) data, asof December 30, 2021, there were 23 insurance businesses listed on the Exchange (NSE). Ten Nigerian insurancefirms made up the sample size. In choosing the selected firms, we used the convenience sampling approach. Thesample firms’ financial statements and annual reports were used to collect data for the study. The statutory auditof the financial accounts served as the foundation for validity and reliability. Inferential (multiple regressions) anddescriptive statistics were used to analyze the data. According to the findings, ERM has no significant impact onthe earnings per share, return on assets, or return on equity of Nigerian-listed insurance companies. According tothe study’s findings, ERM has little or no financial impact on Nigeria’s listed insurance businesses. The researchproposed that risk committee meetings be held regularly in order to improve performance and that members of thecommittee should be proficient in managing risk-related issues. It also suggested that the committee be allowedto operate independently.

Serving Two Masters: Corporate Governance Regulation in the Nigerian Insurance Industry

Serving Two Masters: Corporate Governance Regulation in the Nigerian Insurance Industry

Effect of Liquidity Risk on the Investment of the Nigerian Insurance Industry

Effect of Liquidity Risk on the Investment of the Nigerian Insurance Industry

Predictors of Profitability in the Nigerian Insurance Industry

This study examined the predictors of profitability in Nigeria Insurance Industry between 2011 and 2020. It looked into the effect of financial leverage, solvency margin, financial liquidity and risk underwriting on Profitability of insurance industry in Nigeria. In the study, descriptive research design was employed with the population of thirteen (N=13) composite insurers from which a sample of six (n=6) were randomly selected. Four hypotheses were tested using e-view. Findings showed that SOVEREIGN TRUST plc has the highest ROE with mean value of 0.058489 followed by LEADWAY Insurance Plc with 0.043822 mean value on ROE. Mutual Benefit plc covers 0.038811 and PRESTIGE insurance has ROE of 0.028478. LASACO Assurance Plc with 0.025744 while Cornerstone plc has the lowest mean value on ROE: 0.0112 in the distribution. Thus it is evident that SOVEREIGN TRUST plc and LEADWAY Insurance Plc are the leaders in the Nigerian Insurance industry for the period, with positive effect of financial leverage, solvency margin, financial liquidity and risk underwriting on profitability of the insurance companies in Nigeria. The study therefore concluded that there is statistically significant relationship between the four independent variables (financial liquidity, solvency margin, risk underwriting and financial leverage) on the dependent variable , profitability, proxied by return on equity of insurance companies in Nigeria. The study recommended that stakeholders in the Nigerian insurance industry in collaboration with their regulatory body; National Insurance Commission (NAICOM), should maximize the contributions of the various predictors of profitability in the composite insurance industry across the nation.

Predictors of Profitability in the Nigerian Insurance Industry

Predictors of Profitability in the Nigerian Insurance Industry

Contributory Pension Scheme and Insurance Industry’s Equity Investments in Nigeria

The paper explores the nexus between contributory pension and growth of the Nigerian insurance industry. Proxies for insurance industry growth were taken as direct premium generated and growth of its investments, especially equity investments. Given that equity investment was one of the prescribed investment outlets for insurance industry funds in Nigeria, authors hypothesized that the contributory pension Act of 2014 would spur rapid growth in equity investments of the industry for the period investigated. Ex-post facto research design was followed and data were drawn from the annual accounts and reports of National Insurance Commission, NAICOM, and publications of Pension Regulatory Commission, PENCOM, National Bureau of Statistics, NBC, and Central Bank of Nigeria, CBN, for the period, 2005-2015. Ordinary Least Square (OLS) was the estimation method, whereas techniques for data analysis included Multi-Regression model, t-test statistic, adjusted coefficient of determination and F-statistic. The result of the tests showed that contributory pension has positive and significant impact on the insurance industry’s equity investments (p<0.05). Clearly, reform of pension industry led to rapid increases in the equity investments of the insurance industry but limited only by statutory ceiling on equity investments and what sound prudence dictates.

Human Capital Development and Employee Retention: Examining the Moderating Role of Corporate Culture in Nigerian Insurance Industry

Human Capital Development and Employee Retention are major corporate challenges; hence, their link was investigated. Training and coaching were used as scope for the predictor variable to establish the extent of relationship with the mono-construct employee retention criterion variable. The study adopts the cross sectional survey design amongst 204 workers of 8 registered insurance firms through questionnaire. Spearman Rank Order Correlation Coefficient and Partial Correlation Coefficient were key statistical instruments used for analysis. Revealed result shows a momentous link in human capital development and employee retention. Training and coaching also strongly correlate with employee retention. Corporate culture equally moderates the association between human capital development and employee retention. On the above premise the scholars advice operators of firms to be deliberate by voting in reasonable fund to human capital up-scaling to enhance their commitment to firm, with scholarly evidence as an effective employee retention strategy; employees trained and developed by firms tend to feel indebted to the organization which make them normatively committed to the organization in essence disabusing their intention to leave the firm.

GROSS PREMIUM INCOME AND CLAIMS SETTLEMENT FOR FIRE INSURANCE POLICY IN NIGERIA: A PANEL APPROACH

ABSTRACTClaims, being the heartbeat of the workability of insurance, are the most critical contact influencer between the insuring public and the insurer. It serves as a critical path to truth that shapes the policyholders’ ultimate perceptions of their insurers. This study evaluated the relationship between gross premium income and claims settlement with specific focus on fire insurance business in the Nigerian insurance industry from 2010 to 2021. Data on gross premiums income and gross claims paid over the period were extracted from Nigerian Insurers Association (NIA) annual reports and digest. Stationarity test carried out on the data revealed that data is stationary at the 1%, 5% and 10% levels of significance. Using the ordinary least squares regression, the calculated probability value of 0.0000 is lower than the 0.05 significant value, which shows that there is a significant significance of the data. The computed linear co-efficient of determination (R2= 0.928731) shows that 92.87% of the total return on asset is accounted for by the independent variables which are expense ratio and net claims. It was therefore concluded that there is a significant relationship between gross premium income and gross claims payment of fire insurance in careful consideration must be given to other administrative costs, such as underwriting, which have the potential to reduce the Revenues and profits of the company

THE ROLE OF AUDIT COMMITTEE EFFECTIVENESS IN ENHANCING TIMELINESS OF CORPORATE FINANCIAL REPORTING IN THE NIGERIAN INSURANCE INDUSTRY

This study investigated the impact of audit committee effectiveness on financial reporting timeliness in the Nigerian insurance industry. The study employed secondary data for the years 2012 - 2020. Hypotheses were tested using the Ordinary Least Square (OLS) method. The results revealed a significant relationship between timely financial reporting and audit committee size, expertise, and diligence. There was a negative but insignificant association between audit committee independence and financial reporting. The study concluded and recommended that audit committee effectiveness affects financial reporting timeliness in the insurance industry and that firms should increase the size and meeting frequency of the committee.

Patronage Factors of Motor Vehicle Takaful in Kano State, Nigeria

The Nigerian insurance industry has been associated with low patronage, thus contributing less than 1% to the Gross Domestic Product (GDP). The marketing and distribution segment of the Nigerian oil and Gas industry is facing multiple challenges including difficulty in transporting product through pipelines which necessitate the use of alternative means of transportation by road (Trucks). The main objective of this study is to empirically examine the determinants of patronage of motor vehicle Takaful by members of National Association of Road Transport Owners (NARTO-PTD) Kano State. The population of the study is 320 registered members of NARTO-PTD. Using Taro Yamane sample size formula, the study arrives at a sample of 178 respondents who were selected using simple Random Sampling Techniques. Partial Least Square - Structural Equation Modelling (PLS-SEM) method was employed to test the hypotheses of the study. The result reveals that while awareness is insignificant but perception and religiosity significantly affect patronage of motor vehicle takaful by members of NARTO-PTD in Kano State. The study recommends Takaful Companies to develop policies that will further encourage those highly religious and attract those that are not highly religious through organizing educative programs in masjids and other religious avenues and places of worship. Lastly, the study recommends developing policies that will strengthening the perception (NARTO-PTD) members toward Takaful.

Dysfunctional Nigerian Insurance Industry: Failure of Law or Regulation?

This work interrogates the reason for the poor performance of the Nigerian insurance industry. The reason for doing this is that there is a strong correlation between insurance and development. The illiterate villager in the remotest part of Nigeria understands the advantages of "pooling" in risk mitigation. A system of coming together to contribute resources into a pool in order to take a small percentage of same to compensate the few members of the group who suffer risks is very much part of the everyday life of the traditional Nigerian society. This is what insurance is all about. Insurance, as we see it today, developed from this rudimentary aspect to the sophisticated business which it has become today. Being that our people are familiar with the tenets of insurance what then is the problem of Nigeria’s modern insurance industry that makes it remain at the lowest ebb in terms of performance in the financial services industry? Is the problem that of inadequacy in our law or ineffective regulation? Using the doctrinal method, the study examines both the legal and the institutional framework for insurance business to ascertain what the problem is. Our finding is that notwithstanding some grey areas in the Insurance Act, 2003, the major problem of the industry is failure of regulation. We recommend that the regulator, the National Insurance Commission (NAICOM) be more proactive to enable the industry take its pride of place in Nigeria as is the case all over the developed world.

Enterprise Risk Management in the Nigerian Insurance Industry

The study looked at how Nigerian-listed insurance companies performed in terms of enterprise risk management (ERM). An ex post facto research design was used in the study. According to Nigeria Stock Exchange (NSE) data, as of December 30, 2021, there were 23 insurance businesses listed on the Exchange (NSE). Ten Nigerian insurance firms made up the sample size. In choosing the selected firms, we used the convenience sampling approach. The sample firms’ financial statements and annual reports were used to collect data for the study. The statutory audit of the financial accounts served as the foundation for validity and reliability. Inferential (multiple regressions) and descriptive statistics were used to analyze the data. According to the findings, ERM has no significant impact on the earnings per share, return on assets, or return on equity of Nigerian-listed insurance companies. According to the study’s findings, ERM has little or no financial impact on Nigeria’s listed insurance businesses. The research proposed that risk committee meetings be held regularly in order to improve performance and that members of the committee should be proficient in managing risk-related issues. It also suggested that the committee be allowed to operate independently.

The Nexus between Gross Domestic Product (GDP) and Financial Performance of Firms: Empirical Evidence from the Nigerian Insurance Industry

This study looked at the impact of gross domestic products (GDP) on the Financial performance of insurance firms in Nigeria using gross written premium (GWP), profit before tax (PBT), total assets (TA), capital employed (CE) and shareholders fund (SHF) as proxies for financial performance. The study adopted the theories of shareholder primacy theory also known as the shareholder value theory and signalling theory. shareholder primacy theory sees organisation as entities with the primary objective of maximising the wealth of the shareholder while signalling theory looks at the propensity to change of financial performance to changes in GDP figures. Using secondary data sources, findings from the results of our regression analysis show that Nigeria’s GDP has an impact on Total assets, total capital employed, profit before tax and shareholders fund but has negligible impact on the gross written premiums of insurance firms in Nigeria. It was therefore recommended that government should seek to contribute positively to GDP growth through the instrumentality of fiscal and monetary policies, enterprises should contribute to GDP growth through taxes and employee benefits and firms should adopt a bullish approach to consumption for better GDP outcomes . Keywords: impact, gross domestic products, financial performance DOI: 10.7176/RJFA/12-6-07 Publication date: March 31 st 2021

Technology Diffusion as Therapeutic Prescription for Improved Performance in the Ailing Nigerian Insurance Industry

Technology Diffusion as Therapeutic Prescription for Improved Performance in the Ailing Nigerian Insurance Industry

Contributory Pension Scheme and the Premium Base of the Nigerian Insurance Industry

The paper investigates the veracity of the hypothetical expectation that the implementation of the Pension Reform Act of 2004, as amended, would lead to a quantum growth in the premium base of the Nigerian insurance industry. Given that prior research had confirmed the power of mandated contributory pension scheme to facilitate growth of the financial sector, the paper argued that the insurance industry, being a subsector of the financial system, would experience its fair share of the expected growth. Employing annual gross premium as a proxy for insurance industry growth and measured over a span of eleven years (2005-2015), regression analysis of data showed that premium income of insurance industry had a positive and no significant relationship with contributory pension scheme (β = 0.8496; t = 1.8282; p = 0.1415 ≥ 0.05). The result not being significant at 5% could be traced to two related factors, namely, the manifest reluctance shown by MDAs and other public sector employers to comply with the provisions of section 9(3) of the Pensions Reform Act, 2004 and the failure of PFAs to expose the early retiring workers to the annuity option of pension payment structure; this hamstrung the growth of the annuity business, a major component of the insurance industry in Nigeria. The paper therefore recommends that pension regulatory authorities in Nigeria should compel strict compliance with the relevant provisions of the Act in order for the insurance industry to experience the expect quantum growth.