Effects of Claims Management on Profitability of Insurance Companies in Nigeria

Abstract:

The study reviewed the effects of claims management on profitability of insurance firms in Nigeria with a view to examine the effect of net claim, expense ratio and loss ratio on the return on asset of listed insurance firms in Nigeria from 2010 to 2018. Time series annual data were collated from financial statement of account of insurance companies. The data were analysed via regression analysis which involved ordinary least square estimation technique. The study found that net loss has direct and significant effect on return on asset, expense ratio has positive with an insignificant effect on return on asset and loss ratio has an indirect with an insignificant effect on return on asset of quoted insurance firms in Nigeria. It was concluded that, claims management promote positive influence to insurance companies’ profitability in Nigeria. Thus, insurance companies in a bid to make profit should not forget the main reason for their existence which is bringing the insured back to his/her pre-loss position by paying genuine claims. Therefore, all efforts should be made to pay genuine claims promptly as this increase the confidence of the general public in insurance and the industry as a whole.