INFLUENCE OF CLAIM MANAGEMENT PROCESS ON THE PROFITABILITY OF INSURANCE FIRMS IN NIGERIA

The importance of insurance cover for the survival of a nation is seen in the ability of insurance firms to mitigate risks via claim management process. This paper empirical examined claims management processes with the Nigerian insurance industry. The population for the study is all the insurance companies in Nigeria. The sample size used in the study consisted of five insurance companies which were selected using purposive sampling technique. A correlation research design was employed for the purpose of the study. The reason for employing the design was to establish a relationship between claim payment and profitability of insurance companies. This design was considered suitable and appropriate for the study. The study had four specific objectives and four null hypotheses which were analysed using ordinary least squares method (OLS). The data used in the study was collected from secondary sources such as financial report of CBN, insurers Association (NIA) annual report. The finding from the study showed that the claims department has the sole responsibility of managing claims process which is fundamental to its profit and long-term sustainability. From these research findings, it can be concluded that claims payment affects the profitability of insurance companies. If claim managers can effectively manage their claim processes, it will reduce the amount of claims expenses and thus the insurance company will have more funds to invest. Based on the findings, it was recommended that claims managers in the Nigerian insurance industry should effectively manage their claims processes through the following steps: Site inspection i.e. to access the damage and document the claim, Inspect the policy wording to see which aspects of loss are covered by policy, Meet the insurance loss adjuster to agree on the scope of repairs, Prepare a damage estimate, Negotiate on settlement, and Settle claim successfully.