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Insurance & Actuarial Science

Impact Of Insecurity On Insurance Claims In Nigeria A Case Study For Selected Insurance Companies

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ABSTRACT

The main objective of this study is to investigate the impact of insecurity on insurance claims in Nigeria using selected insurance companies as a case study. From the research objectives and questions hypotheses were constructed to helped guide the study. The study will contribute to the literature on the impact of insecurity on the insurance industry, policymakers, insurance companies, and other stakeholders in the Nigerian insurance industry. The study will focus on selected insurance companies operating in Nigeria, Imo State, Owerri to be precise. The study conceptually reviewed conceptualizing Security, concept of claim, claims management process, Insurance claims manual and Insurance claims fraud. Expected Utility Theory is used as the theoretical framework of this study. A descriptive survey research design was adopted. Data gathering was conducted via the field survey among insurance companies with the aid of structured questionnaire. A total of 155 copies of questionnaire were set out. A random sampling technique was adopted in the data gathering process. The study founded that there is a positive relationship between insecurity and insurance claims in Nigeria, the types of risks associated with insecurity have a significant effect on insurance claims in Nigeria, Insecurity has a negative impact on the profitability of selected insurance companies in Nigeria, selected insurance companies that have effective risk management strategies are better able to mitigate the impact of insecurity on their operations and effective risk management strategies can help insurance companies to minimize the impact of insecurity on their operations and maintain profitability. The researcher recommended that Claims manager should put forward strategic plans to ensuring that insurance claims complaint files are properly kept, monitored and handled for needs that may warrant its usefulness in the future and state-of-the-art training mechanism should be put in place to enhance and improve the working pattern of a claim officer, which invariably might affect the organizational efficiency of insurance companies.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Nigeria has been grappling with various forms of insecurity for several years, with violence and criminal activities such as terrorism, kidnapping, armed robbery, and banditry becoming increasingly prevalent in different parts of the country. This has had a significant impact on the Nigerian economy, with various sectors being adversely affected, including the insurance industry. The Nigerian insurance market is highly competitive, and insurance companies rely heavily on premiums paid by policyholders to meet their financial obligations.

Insecurity affects the insurance industry in several ways. For instance, it can lead to an increase in the number of claims filed by policyholders, which in turn can lead to higher costs for insurance companies. This is because insurance companies are obligated to pay claims to policyholders who have suffered losses as a result of insured risks. Insecurity can also lead to a decrease in the number of people willing to purchase insurance policies, as they may perceive the risks associated with certain activities or areas as being too high. This can, in turn, lead to a reduction in revenue for insurance companies.

Therefore, it is essential to investigate the impact of insecurity on insurance claims in Nigeria, as this can provide valuable insights into the challenges facing the Nigerian insurance industry. By understanding the relationship between insecurity and insurance claims, insurance companies can develop effective risk management strategies that can help mitigate the impact of insecurity on their operations. Policymakers can also use this information to develop policies that promote the growth and sustainability of the insurance industry in Nigeria.

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In conclusion, the study of the impact of insecurity on insurance claims in Nigeria is important  in understanding the challenges faced by the Nigerian insurance industry, and in developing strategies that can help mitigate the impact of insecurity on the industry.

1.2 Statement of the problem

Insecurity is a pervasive problem in Nigeria, with numerous forms of violence and criminal activities being experienced across the country. This has had a significant impact on different sectors of the economy, including the insurance industry. Insurance is a risk management tool that provides protection against unforeseen events, and the level of insecurity in a region can have a significant effect on the insurance claims made by policyholders. This study aims to investigate the impact of insecurity on insurance claims in Nigeria using selected insurance companies as a case study.

The issue here is that the widespread presence of insecurity in Nigeria has contributed in making it difficult for insurance companies to operate effectively. Insurance companies are obligated to pay claims to policyholders who have suffered losses as a result of insured risks. However, insecurity has led to an increase in the number of claims filed by policyholders, which can lead to higher costs for insurance companies. Insecurity can also lead to a decrease in the number of people willing to purchase insurance policies, which can, in turn, lead to a reduction in revenue for insurance companies.

Therefore, there is a need to investigate the impact of insecurity on insurance claims in Nigeria to understand the challenges facing the Nigerian insurance industry. By understanding the relationship between insecurity and insurance claims, insurance companies can develop effective risk management strategies that can help mitigate the impact of insecurity on their operations. Policymakers can also use this information to develop policies that promote the growth and sustainability of the insurance industry in Nigeria.

In conclusion, the problem this study aims to address is the impact of insecurity on insurance claims in Nigeria and the challenges facing the Nigerian insurance industry as a result.

1.3 Objective of the study

The main objective of this study is to investigate the impact of insecurity on insurance claims in Nigeria using selected insurance companies as a case study. To achieve this main objective, the study will have the following specific objectives:

  1. To examine the relationship between insecurity and insurance claims in Nigeria.

 

  1. To identify the types of risks associated with insecurity that affect insurance claims in Nigeria.

 

  1. To determine the impact of insecurity on the profitability of selected insurance companies in Nigeria.

 

  1. To explore the risk management strategies employed by selected insurance companies to mitigate the impact of insecurity on their operations.

 

  1. To make recommendations on how insurance companies and policymakers can develop effective strategies to address the challenges posed by insecurity in the Nigerian insurance industry.

By achieving these objectives, this study aims to provide important information about the challenges that the Nigerian insurance industry faces  due to insecurity and to offer guidelines and recommendations on how insurance companies and policymakers can address and manage  these challenges effectively.

1.4 Research Questions

From the statement of the problem stated above, this study attempts to address the following questions;

  1. What is the relationship between insecurity and insurance claims in Nigeria?
  2. What are the types of risks associated with insecurity that affect insurance claims in Nigeria?
  3. How has insecurity affected the profitability of selected insurance companies in Nigeria?
  4. What risk management strategies have selected insurance companies employed to mitigate the impact of insecurity on their operations?
  5. How effective have these risk management strategies been in addressing the challenges posed by insecurity in the Nigerian insurance industry?
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1.5 Research Hypothesis

From the research objectives and questions above the following hypotheses helped guide the study;

Ha1:   There is a positive relationship between insecurity and insurance claims in Nigeria.

Ho1: There is nO positive relationship between insecurity and insurance claims in Nigeria.

 

Ha2:   The types of risks associated with insecurity have a significant effect on insurance claims in Nigeria.

H02:     The types of risks associated with insecurity have no significant effect on insurance claims in Nigeria.

 

Ha3:   Insecurity has a negative impact on the profitability of selected insurance companies in Nigeria.

H03:    Insecurity has no negative impact on the profitability of selected insurance companies in Nigeria

 

Ha4:   Selected insurance companies that have effective risk management strategies are better able to mitigate the impact of insecurity on their operations.

H04:  Selected insurance companies that have effective risk management strategies are better not able to mitigate the impact of insecurity on their operations.

 

Ha5:   Effective risk management strategies can help insurance companies to minimize the impact of insecurity on their operations and maintain profitability.

H05: Effective risk management strategies can help insurance companies to minimize the impact of insecurity on their operations and maintain profitability.

 

1.6   Significance of the study

  1. Contribution to the Literature: The study will contribute to the literature on the impact of insecurity on the insurance industry. It will add to the body of knowledge on the challenges facing the Nigerian insurance industry, and offer insights into the relationship between insecurity and insurance claims.
  2. Practical Implications: The study will have practical implications for policymakers, insurance companies, and other stakeholders in the Nigerian insurance industry. It will provide insights into the types of risks associated with insecurity that affect insurance claims, and the impact of insecurity on the profitability of insurance companies. The study will also explore risk management strategies employed by insurance companies to mitigate the impact of insecurity on their operations, and make recommendations on how insurance companies and policymakers can develop effective strategies to address the challenges posed by insecurity.
  3. Economic Implications: The study will have economic implications for the Nigerian insurance industry and the broader Nigerian economy. The findings of the study can help to inform policies aimed at promoting the growth and sustainability of the Nigerian insurance industry, and by extension, the Nigerian economy. By providing insights into the challenges posed by insecurity to the insurance industry, the study can help to promote stability and confidence in the industry, which is crucial for economic development.
  4. Case Study Approach: The use of selected insurance companies as a case study will provide a detailed and delicate understanding of the impact of insecurity on the Nigerian insurance industry. By focusing on specific insurance companies, the study can provide insights into the experiences of these companies and the strategies they have employed to address the challenges posed by insecurity. This approach can help to identify best practices and lessons that can be applied more broadly in the Nigerian insurance industry.

1.7    Scope of the Study

  1. Geographic Scope: The study will focus on selected insurance companies operating in Nigeria, and the impact of insecurity on the operations of these companies. The study will not include insurance companies operating outside Nigeria, nor will it examine the impact of insecurity on other sectors of the Nigerian economy.
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  1. Time Scope: The study will cover a period of five years, from 2016 to 2020. This period was selected to enable the study to examine the impact of insecurity on insurance claims over a significant period and to capture any changes that may have occurred in the industry during this period.

 

  1. Industry Scope: The study will focus on the impact of insecurity on the Nigerian insurance industry. The study will not examine the impact of insecurity on other financial sectors, such as banking or microfinance.
  2. Data Scope: The study will use secondary data from the selected insurance companies, industry reports, and other relevant sources. The study will not involve primary data collection, such as surveys or interviews with industry stakeholders.

 

  1. Risk Scope: The study will examine the types of risks associated with insecurity that affect insurance claims, such as terrorism, kidnapping, and other forms of violence. The study will not examine other types of risks that may affect insurance claims, such as natural disasters.

Generally , the scope of this study is limited to selected insurance companies operating in Nigeria, and the impact of insecurity on their operations, specifically looking at the types of risks associated with insecurity that affect insurance claims.

1.8    Definition of terms

  1. Insecurity: Refers to the state of being unsafe or exposed to danger or risk. In the context of your study, insecurity refers to the types of risks associated with violence, terrorism, and other forms of insecurity that affect insurance claims.

 

  1. Insurance Claims: Refers to a request made by an insured person to an insurance company for compensation for a covered loss or injury. In the context of your study, insurance claims refer to the claims made by policyholders to insurance companies in relation to losses resulting from insecurity.
  2. Risk: Refers to the possibility of loss or harm resulting from an event or activity. In the context of your study, risk refers to the types of risks associated with insecurity that affect insurance claims, such as terrorism, kidnapping, and other forms of violence.
  3. Policyholder: Refers to an individual or entity that has purchased an insurance policy from an insurance company. In the context of your study, policyholders refer to individuals or entities that have purchased insurance policies from the selected insurance companies.
  4. Premium: Refers to the amount of money paid by a policyholder to an insurance company in exchange for coverage under an insurance policy. In the context of your study, premium refers to the amount of money paid by policyholders to the selected insurance companies for coverage against risks associated with insecurity.
  5. Underwriting: Refers to the process by which an insurance company evaluates the risks associated with insuring a particular person or entity and determines the premiums to be charged for coverage. In the context of your study, underwriting refers to the process by which the selected insurance companies evaluate the risks associated with insecurity and determine the premiums to be charged for coverage against such risks.
  6. Risk Management: Refers to the process of identifying, evaluating, and controlling risks associated with a particular activity or organization. In the context of your study, risk management refers to the strategies employed by the selected insurance companies to mitigate the impact of insecurity on their operations.

    Pages:  70

    Category: Project

    Format:  Word & PDF               

    Chapters: 1-5                                          

    Source: Imsuinfo

    Material contains Table of Content, Abstract and References.

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