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Advances in Social Sciences Research Journal – Vol. 8, No. 4
Publication Date: April 25, 2021
DOI:10.14738/assrj.84.9938. Oyetungi, O. I. O., & Momoh, O. A. (2021). Poor Claims Settlement And Demand For Insurance Policies In Nigeria. Advances in Social
Sciences Research Journal, 8(4). 53-64.
Services for Science and Education – United Kingdom
Poor Claims Settlement And Demand For Insurance Policies In
Nigeria
Oyefemi Ismail O. Oyetunji, PhD, FCA
Department of Accountancy, The Polytechnic, Ibadan-Nigeria
Omowumi Ayoni Momoh, ACII, FCILRM
Department of Insurance. The Polytechnic, Ibadan-Nigeria
ABSTRACT
This study investigates the poor claims settlement and demand for insurance policies
in Nigeria to provide empirical evidence which would assist not only the insurance
companies but also the policymakers by using these findings to design future
insurance services and policies that can be geared towards promoting insurance
market development. The population focused in the study included few licensed
insurance firms in Nigeria. This is due to the fact that they dominate and control the
larger interest in the market share. Primary data was used for this study through
well-structured questionnaire. Chi- squared statistics and correlation with the
tabulated contingency table on the basis of an assumptions were employed. The
results show that poor claim settlement has significant effect on demand for
Insurance policies in Nigeria and that there is long term and significant relationship
between poor claim settlement and demand for insurance policies in Nigeria. The
study therefore, recommends that insurance industry should be redefined through
appropriate Acts, introducing competitions and innovations in the services so as to
compete effectively and meet consumer needs by dealing with changing expectations
of policyholders so as to ensure that satisfaction of all the parties are guaranteed.
Keywords: Insurance Companies, Demand, Policyholders, Market development
INTRODUCTION
The relationships between financial sector and economic growth remain an inconclusive debate
in economic literature (Adu, 2013; Kabir and Halder, 2018). The Neo classical economists
suggested that if there is no technological development in the economy, growth will occur at a
steady state. However, Endogenous growth theory opposed the earlier submissions and stated
that the existence of investment and growth in a sector of the economy can provide positive
externalities for the other sectors of the economy. Hence, recently the financial sector has been
recognized as one of the viable channels fostering economic growth if properly regulated and can
move the economy up far above a steady state transforming and improving industries to create
positive externalities for other sectors of the economy (Yusuf, Ajemunigbohun, & Alli 2017). This
simply shows that it is possible for the financial system to systematically promote the economic
growth in the economy.
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 4, April-2021
Services for Science and Education – United Kingdom
One of the core components of the financial system is insurance business, which had substantial
potential for expanding positive externalities to other sectors of the economy. It is possible for
the insurance business to generate positive externalities through financial intermediations, risk
transfer, as well as employment generation which will also promote economic growth in the
economy (Outveviller, 1990; Ward & Zurbruegg, 2000). It should also be noted that most of the
developing countries including Nigeria, had felt the impacts of financial market on their economic
growth (Chukwulozie, 2006). Although, lack of effective functioning of the market among other
factors constitute major constraints leading to differences in the operations of the sector across
the economies (Kabir & Halder, 2018). In order to avert the obstacles confronting the financial
markets in the developing economies, government and policy makers were not helping the
situations as conducive and favorable laws were neither provided nor enacted which made
situation becoming tensed for the operators and the customers. Areas of interests that needed to
be focused by the authorities include the legal aspects of the market, economic and political as
well as social factors/ consideration. These factors will go a long way in creating avenue not only
for generating more positive externalities but also will promote the economic development.
According to (Pant et al., 2017) Insurance as a financial intermediary plays a significant role in
economic growth of any country. Insurance is a way to minimize and provide protection against
those risks which are beyond human control. It is a way to indemnify to those unpredictable
losses. Notably, the main reason for insurance business in an economy is to make the economy
more resilient for the people. It is one of the security measures used to protect oneself, family as
well as properties against unplanned or unforeseen adverse events. Insurance business entails
selling of promises to people in order to indemnify them or to restore them to their original
financial position in case of eventual loss. The promises are in form of policies to the customers
(policyholders). This apparently means that the policy holder (the insured) has to pay for future
in form of premium upfront to the insurer an amount specified by the insurer within a future
period of time. The policy holder receives a document called insurance policy which sets out the
terms and conditions in which the insured will be financially compensated. On the occurrence of
the event, the policy holder approaches the insurer so as to collect or redeem the payments of
premium as the company has agreed to pay back the amount on the occurrence of the events
within or over a particular future period. The amounts described constitute claim from the
insurer. It is of utmost importance for the insurer to follow all the rules and theories guiding
insurance practice so as not to jettison the confidence of the policy holder not only in terms of
timely payment of claims but also as regards commensurate amounts according to the insurance
policy. To do this, the premium income ab-initio must be sufficiently enough using a standard
insurance rate to cover the claim cost as well as other underwriting costs (Diacon, 1983;
Harrington and Niehaus, 2006; Epetimehin and Ekundayo, 2012; cited in Afolabi, 2018). Any
attempt to violate this basic insurance theory will not only be difficult for the insurer to pay the
claims but will also tarnish the image of the company as well as having adverse effects on the
profitability of the company in the long run. Also, it has been noted that accumulated previous
years claim showing up in subsequent years including increasing claim costs makes it difficult
for some insurance firms to pay claims as at when due and has reflected negatively on the firm’s
performance (Yusuf and Dansu, 2014; Lalithchanadra and Kumari, 2015). Firms passing through
such situations always look for alternatives by paying lower claims or not paying at all. Non- payment of claims or underpayment could lead to litigation, mistrust in the industry and policy
termination by the insuring public. The cases of corruptions, misappropriation of fund as well as
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Oyetungi, O. I. O., & Momoh, O. A. (2021). Poor Claims Settlement And Demand For Insurance Policies In Nigeria. Advances in Social Sciences
Research Journal, 8(4). 53-64.
URL: http://dx.doi.org/10.14738/assrj.84.9938
fraud cannot be left out as among those factors facilitating poor claims in Nigerian insurance
industry.
Despite the role and contributions of insurance business to the economic growth and
development of the economy, it is regretted that insurance penetration in Nigeria with
population of over 200 million remains very shallow (Oyekunle and Momoh,2013) and the
growth expected since its inceptions in 1921 has not been significant until 1980s (Tajudeen, &
Adebowale, 2013). In terms of penetration rates for both life and non-life insurance as at 2019,
Nigeria's record (0.65%) which is very poor compared to those of South Africa (14.0%), Namibia
(7.0%), Mauritius (6.5%), Morocco (3.5%), Kenya (2.7%) and Tunisia (2.0%) even though there
has been a continuous upward growth in the rate since 2016. While gross premium income in
the Nigerian insurance industry grew at double-digit rates in 2019 despite its economic
challenges, the impact of the growth is still less significant as the sector contributes only 0.7%
towards the country's GDP (Swiss Re Institute, 2020).
The industry had been unable to convince the larger portion of the population of the better
claims. Most of the insurers in Nigeria found it difficult to settle claims and other financial
obligations of their previous customers (Uranta, 2004 cited by Aduloju, Awoponle & Oke, 2008;
Akinbola, 2014) Likewise, the experience from policy holders seemed not enough in convincing
prospective customers into the contract. This consequently called for reform of the industry in
which many problems were resolved excluding fire insurance policy on both motor vehicles and
burnt houses claims which still remained unresolved (Ayuba & Isyaka, 2020). Hence, the
relationship between poor claims settlement and demand for insurance policies in Nigeria rates
are just evolving (Johri (2009); Tajudeen, et al 2013) and Nebo and Okolo (2015). It is based on
this premise that this study is interested as shown that insurers were able to cover less than five
percent of the insurable population and also less than one percent of the insured contributes to
Gross Domestic Products of Nigerian economy (Usman and Salami, 2008).Therefore, in view of
the above assertion, this study intends to answer the following research questions: What are the
effects of poor claims on demand for insurance policies in Nigeria? What are the long term
relationships between poor claim settlement and demand for insurance policies in Nigeria?
THE OBJECTIVES OF THE STUDY
The broad objective of this study is to determine the impact of poor claims on demand for
insurance policies in Nigeria. While the specific objectives of the study include:
(i) To determine effects of poor claims on Demand for Insurance Policies in Nigeria.
(ii) To determine the long term relationship between poor claim settlement and
demand for insurance policies in Nigeria.
In line with the research objectives of this study and in search of the answers to various research
questions, the following hypotheses were postulated:
HO1: Poor claim settlement does not have significant effect on Demand for Insurance
Policies in Nigeria.
HO2: There is no significant long term relationship between poor claim settlement and
demand for insurance policies in Nigeria.
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 4, April-2021
Services for Science and Education – United Kingdom
There is the need for more empirical studies on relationship between poor claims settlement and
demand for insurance policies in Nigeria. This is particularly important considering series of
fraudulent practices associated with insurance business in Nigeria despite various established
reforms in the country. This explains more on the rationale for our study. The rest of the paper
is organized as follows: the next section presents the literature review. The third section provides
the specification of the model. The fourth section reports the empirical findings of the study. The
last section concludes the paper.
LITERATURE REVIEW
Conceptual Review
Insurance Claim
Insurance is, essentially, a contract by which one party gives a consideration, typically paid in
money, in exchange for a promise from another party to make a return payment if a certain loss
has occurred. Insurance is also a contract whereby one undertakes to indemnify another or pay
or allow a specified or ascertainable amount or benefit upon determinable risk contingencies
(Bierly, 1990). The concept of insurance claim had been defined by various authors submitting
similar meaning: Irukwu (1989) defines insurance claim as an insurance contract in which the
insurer undertakes to indemnify the insured against a loss, which may or may not arise at a future
date or to pay a certain amount of money in the happening of a certain event. Crawford (2007)
defined claim as the heartbeat of insurance that are the most contract the insuring public has
with the industry and thus, critical moment of truth that shapes a customer’s overall perception
of their insurer. Singh (2007) views claims as the defining moment in the customer relationship
for insurance firms, with a firm’s success often defined by one factor: the customer’s experience
around claims. AIRMIC (2009) stated that claims handling is the basis on which an insurance
company is ultimately judged by clients and the key issue affecting the reputation of the insurer.
It represents the legitimate delivery of the promise at the heart of the insurance contract; which,
indeed, for many insurance companies, excellent claims handling service is considered to be a
differentiator that distinguished them from the competition. According to Asokere & Nwankwo
(2010) claim is a demand made by the insured person to the insurer for the payment of benefits
under a policy. It is the defining moment in the relationship between an insurer and its customer
(Francis & Butler, 2010).
Butler and Francis (2010) asserted that claims represent the largest single cost to insurers and
80.0 per cent of all premiums are spent on claims payment and associated handling charges.
Hence, Redja (2008) opined that claim management includes all managerial decisions and
processes concerning the settlement and payment of claims in accordance with the terms of
insurance contract. Vaughan &Vaughan (2008) defines claim as the notification to an insurance
company that payment of an amount is due under the terms of a policy. Capgemini (2011)
explained that claim is the gateway to the customer that will drive improvement in the insurers’
customer acquisition, retention, enterprise business intelligence for product development
insights and profitability for the next several years. While, DiNapoli (2013) explained that claim
represents a demand presented for the payment of money due for goods that have been delivered
or services that have been provided. Afolabi (2018) defined an insurance claim as a formal
request to an insurance company, asking for a payment based on the terms of the insurance
policy.
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Oyetungi, O. I. O., & Momoh, O. A. (2021). Poor Claims Settlement And Demand For Insurance Policies In Nigeria. Advances in Social Sciences
Research Journal, 8(4). 53-64.
URL: http://dx.doi.org/10.14738/assrj.84.9938
Demand for insurance policy
Scholars have been able to link the response of the customers engaging in financial services with
demand for insurance policy (Ward & Zurbruegg, 2002; Beck & Webb 2003; Hussels, Ward &
Zurbruegg 2002; 2010). Onafalujo, Abass & Dansu, 2012 stated that the number of insurance
products or packages that the insured is willingly and able to purchase at a time so as to transfer
the risk to the insurer within a specified terms of agreement has been classified as demand for
insurance.
There exists many factors that encourage people to be involved in insurance business. Those
factors tend to have positive or negative influence on the insurers and the insured. Economic
factor focuses on the price of the insurance product, income as the long term factor that
encourages demand for insurance policy (Beck and Webb (2003).Although, higher level of
incomes has been associated with higher risks. Lewis 1989 stated that positive relationship
exists between demand for life insurance and income. Yet, the rate of subscription to insurance
policy (life policy) especially in advanced economy is much higher than those of developing
economy. This is due to many factors that failed to provide conducive environments for the
insured .The political, legal and social factors including education, communication and physical
equipments in Nigeria seemed lacking some features compared to what operates in the
developed economies (Nwankwo and Durowoju,2011). Specifically, Browne et al, (2010) found
that the relationship between the proportion of foreign insurance companies and motor vehicle
premium density is negative and statistically significant. It simply shows that a highly
competitive internal insurance market, with low prices, might not be so attractive for foreign
firms. It was also stated that the relationship between general liability and foreign insurance
market share is positive and significant, which means that due to numerous claim defaults noted
among the domestic insurance firms, the increasing rate of foreign insurance companies in
Nigeria fosters a highly competitive domestic market, which results in lower prices and increased
insurance consumption.
RESEARCH METHOD
Survey research design method had been employed in this study. This is due to the convenient
means of gathering and analyzing similar information in due process (Abbott, 2002;2004). Field
survey was used to collect data among the sampled insurance companies and the basic
instrument employed in gathering the data was a structured questionnaire which have been
divided into two parts. The first part is made of personal data and the second part shows related
variables in the study. The population focused in the study included the few licensed insurance
firms in Nigeria. This is due to the fact that they dominate and control the larger interest in the
market share (National Insurance Commission, 2015).Stratified sampling technique was also
adopted where twenty five companies chosen from head administrative sections of Oyo and
Lagos states with 130 questionnaires distributed and only 115 responses were well filled and
returned which is a very good percentage response The hypothesis was also tested using Chi- square and correlation with the tabulated contingency table on the basis of an assumption of five
percent level of significance.
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 4, April-2021
Services for Science and Education – United Kingdom
Table 1. Roles of insurers in poor claims settlements and insurance demand policies in Nigeria
Variables SA A SD D U Total t-statistics
The insurers and the insured are
acting in the interest of the
public
24(2
1)
54(46
)
14(12) 13(11) 10(8) 115(100) 4.08(0.000)
Insurance companies have been
implicated of various
misconducts
50(4
3.4)
44(38
.2)
3(2.6) 11(9) 7(6) 115(100) 9.23(0.000)
Insurers have been blamed for
poor claims in the pasts
51(4
4)
50((4
3)
3(2.6) - 11(9) 115(100)
There are past evidence where
insurers have been accused of
misconducts leading to poor
claims
32(2
8)
28(24
)
17(15) 20(17) 18(1
6)
115(100) 6.86(0.000)
Source: Authors’ computation, 2021.
The above table 1, pinpointed the impacts of the insurers in poor claims settlements and
insurance demand policies in Nigeria. While most of the respondents support the opinion that
the two sides of the parties are acting in the interest of the public with a total number of 78
respondents which represents (50.4%); Only 27(23%) disagreed, while 10(08%) respondents
are undecided. Also, due to the experience that were gathered on the various misconducts on the
parts of the insurers which might facilitate poor claims, it was noticed that majority of
respondents 94(81.6%) agreed that insurance firms have been implicated of misconducts in the
past. Just 14 respondents disagreed and only 7 (6%) remains undecided. On the augments of the
blamed on the insurance firms for poor claims, majority of the respondents 101(87%) also
support the submissions by agreeing with the statement, although only 3(2.6%) respondents
disagreed and just 11(9%) remains undecided. It was noticeably discovered that insurance
companies played one of the vital roles in poor claims and which has eventually had enormous
impacts on the demand for insurance policies in the sector of the economy.
Table 2. Supervision of poor claim settlements by regulatory bodies in Nigeria
Variables SA A SD D U Total t- stat
Enforcements of anti-social
practices has exposed poor claims
and other misconducts in Nigeria.
27(2
3)
26(2
3)
18(16) 27(23) 17(15) 115(10
0)
6.94(0.00
0)
Appropriate measures have been
established monitoring poor
claims in Nigeria
20(1
7)
38(3
3)
7(6) 22(19) 28(24) 115(10
0)
7.22(0.00
0)
Insurance decree/acts is adequate
for supervision and regulation of
insurance business in Nigeria
4(3) 32(2
8)
25(22) 25(22) 29(25) 115(10
0)
7.33(0.00
0)
The performance of rating
insurance and financial operators
in Nigeria is satisfactory
22(1
9)
16(1
4)
20(17) 18(16) 34(32) 115(10
0)
6.02(0.00
0)
Source: Authors’ computation, 2021.
Economies need to be guided and regulated in order to prevent unnecessary abuse, and
exploitations as well as ensuring smooth running of the economies. Table 2 above presents the
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Oyetungi, O. I. O., & Momoh, O. A. (2021). Poor Claims Settlement And Demand For Insurance Policies In Nigeria. Advances in Social Sciences
Research Journal, 8(4). 53-64.
URL: http://dx.doi.org/10.14738/assrj.84.9938
question about the anti-social practices, which has exposed poor claims and other malpractices
in Nigeria, most respondents 53(46%) still agreed with the statement,45(39) respondents
disagreed , while only17(15) are yet to decide on the statement. Also, in terms of the
establishments of the appropriate measures, monitoring poor claims in the economy, 58(50.4%)
respondents agreed but 36 also agreed that the both the Acts and the monitoring bodies are not
effective in achieving the desired results 50(43.4%) respondents disagreed that the Acts/
decrees are adequate for supervision of poor claims with consequence effects on demand for
insurance policies.
Table 3 Satisfactory demand for insurance policies in Nigeria
Poor claims influence the demand
for insurance policies in Nigeria
39(
34
%)
29(2
5%)
18(1
6%)
15(13
%)
14(12
%)
115(1
00%)
6.77(0.00
0)
Insurance risk cultures have
effects on demand for insurance
policies in Nigeria.
22(
19
%)
24(2
1%)
18(1
6%)
27(23
%)
24(21
%)
115(1
00%)
7.08(0.00
0)
The number of branches and the
attitude of insurer’s staff influence
demand for insurance policies
20(
18
%)
23(2
0%)
18(1
6%)
21(18
%)
33(29
%)
115(1
00%)
6.98(0.00
0)
Safety of transactions go a long
way influences demand for
insurance policies in Nigeria
12(
10
%)
34(3
0%)
20(1
8%)
18(16
%)
31(27
%)
115(1
00%)
7.02(0.00
0)
Source: Authors’ computation, 2021. ** Correlation is significant at the 0.01 level (2-tailed)
The table 3 above shows the responses in respect of satisfactory demand for insurance policies
in Nigeria. While a total of 68(59.1%) agreed that poor claims influences demand for insurance
policies, 33(29%) disagreed and 14(12%) are undecided at the time. In term of the effects of
insurance risk culture on demand for insurance policies, the responses recovered showed that
46(38%) agreed with the question, 35(29%) respondents disagreed and 24 remain undecided at
this time. Also, in terms of the numbers of offices / branches opened across the country and its
influence on the demand for insurance policies, 43(38%) respondents agreed with the question,
39(34%) disagreed and the remaining 33(29%) were undecided at this period.
TEST OF HYPOTHESES
Hypothesis 1
H0: Poor claim settlement does not have significant effect on Demand for Insurance
Policies in Nigeria.
Variables SA A UD D SD TOT
AL
Poor claims influence the demand for insurance
policies in Nigeria
34% 25% 16% 13% 12% 100%
There are past evidence where insurers have been
accused of misconducts leading to poor claims
28% 24% 15% 17% 16% 100%
Source: Authors’ computation, 2021. ** Correlation is significant at the0.01 level (2-tailed)
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The data on these variables are tabulated on the contingency table below:
Table 4 H01: Contingency Table
Options Q1 Q2 Q1 + Q2 Difference Mean Deviation(x) X2
SA 34 28 62 6 6.2 4.2 17.64
A 25 24 49 1 4.9 2.9 8.41
UD 16 15 31 1 3.1 1.1 1.21
D 13 17 30 -4 3.0 2.1 4.41
SD 12 16 28 -4 2.8 0.8 0.64
TOTAL
Mean
100
10
100
10
200
∑=2
∑D=0 20 11.1 32.31
Source: Authors’ computation, 2021.
To test the stated hypothesis, the method of analytical technique employed for the purpose of
this study is Chi-Square(x2). It is employed to prove the hypothesis through relevant selected
questions from the questionnaire with the corresponding data. The above contingency table has
been prepared based on the assumption of 5%level of significance, the critical value from the
table shows 9.49, when df is 4.Hence, the calculated value of 32.31 is greater than the critical
value of 9.49 (x2) which rejects the null hypothesis that poor claim settlement does not have
significant effect on demand for insurance policies in Nigeria, and accept the alternate hypothesis
that poor claim settlement have significant effect on demand for insurance policies in Nigeria.
This means that payment of poor claims by the insurance firms discourages the insured from
demanding from further policies in the industry. Also past evidence of misconducts from the
insurers will continue ringing negative impacts on the insured‘s mind for a very long time.
Correlation:
This test investigates the effects of poor claims and insurers misconducts on insurance demand
policies in Nigeria. The result of the test shows that there is strong, negative and significant effect
among poor claim, insurers’ misconducts and demand policies in Nigeria. This negates the null
hypothesis that there is no significant effect between poor claims and insurance policies in
Nigeria and is therefore rejected at 1% level. This shows that poor claims influences and insurers
misconducts are inseparable analytical factor.
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Oyetungi, O. I. O., & Momoh, O. A. (2021). Poor Claims Settlement And Demand For Insurance Policies In Nigeria. Advances in Social Sciences
Research Journal, 8(4). 53-64.
URL: http://dx.doi.org/10.14738/assrj.84.9938
Table 5 Correlations
Poor_ claim_
influences
Insurers_
Misconducts
Pearson correlation
Poor_claim_studies Sig(2-tailed)
N
Pearson correlation
Insurers_ Misconducts Sig(2-tailed)
N
1
115
638**
.000
115
.638**
.000
115
1
115
Source: Author’s computation, 2021. ** Correlation is significant at the0.01 level (2-tailed)
The effects of poor claims will not only have negative impacts on the policies at this period alone
but the future will also be jeopardized if not attended to in time coupled with various
misconducts experience noticed on the part of insurers staff (Obasi ,2010; Shamsher, Naveen and
Kumkum (2014). This unethical practices was not only required proper investigations but also
needed a strict preventive measures in future (Saudhu and Bala, 2011; Ziaei, 2012).
Hypothesis 11:
H0: To determine the long term relationship between poor claim settlement and demand
for insurance policies in Nigeria.
Table 6
Variables SA A UD D SD TOTA
L
The performance of rating insurance and
financial operators in Nigeria is satisfactory
19% 14% 17% 18% 32% 100
%
Safety of transactions go a long way influences
demand for insurance policies in Nigeria
10% 30% 18% 16% 26% 100
%
Source: Author’s computation, 2021. ** Correlation is significant at the0.01 level (2-tailed)
The data on these variables are tabulated on the contingency table below:
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 4, April-2021
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Table 7 H02: Contingency Table
Options Q3 Q4 Q1 + Q2 Difference Mean Deviation(x) X2
SA 19 10 29 9 2.9 0.81 17.64
A 14 30 44 -16 4.4 2.4 5.76
UD 17 18 35 -1 3.5 1.5 2.25
D 18 16 34 2 3.4 1.4 1.96
SD 32 26 58 6 5.8 3.8 14.44
TOTAL
Mean
100
10
100
10
200
∑=2
∑D=0 20 10 42.05
Source: Authors’ computation, 2021.
In order to test the stated hypothesis, the method of analytical technique employed for the
purpose of this study is Chi-Square (x2). It is employed to prove the hypothesis through relevant
selected questions from the questionnaire with the corresponding data. The above contingency
table has been prepared based on the assumption of 5%level of significance, the critical value
from the table shows 9.49, when df is 4. Hence, the calculated value of 42.05 is greater than the
critical value of 9.49 (x2) which rejects the null hypothesis that there is no significant long term
relationship between poor claim settlement and demand for insurance policies in Nigeria and
accept the alternate hypothesis that there exists a significant long term relationship between
poor claim settlement and demand for insurance policies in Nigeria. This impliedly means that
the type and nature of poor claims by the insurance firms will go a long way in determining the
success or otherwise of the demand polices in the nearest future periods (Shamsher, Naveen and
Kumkum (2014). Hence, the insurance industry should improve their performance rating
including other financial operators in Nigeria, also embark on various safety measures of
transactions as this will go a long way in influencing the demand for insurance policies in Nigeria
(Nwankwo & Ajemunigbohun, 2013).
Correlation:
Performance rating and long term safety are being used by the financial regulatory agencies and
authorities in regulating and monitoring of insurance claims in Nigeria. The results of the test
revealed that there is positive and significant relationship between the two variables in Nigeria.
This therefore, shows that the stated null hypothesis; that there is no significant longterm
relationship, no significant long term relationship between poor claim settlement and demand
for insurance policies in Nigeria be rejected at 1% level. And accept the alternate hypothesis that
there exists a significant the long term relationship between poor claim settlement and demand
for insurance policies in Nigeria, Which depicts that performance rating and long term_ Safety
are inseparable.
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Oyetungi, O. I. O., & Momoh, O. A. (2021). Poor Claims Settlement And Demand For Insurance Policies In Nigeria. Advances in Social Sciences
Research Journal, 8(4). 53-64.
URL: http://dx.doi.org/10.14738/assrj.84.9938
Table 8 Correlations
Performance_
Rating
Long Term_ Safety
Pearson correlation
Performance_ Rating Sig(2-tailed)
N
Pearson correlation
Long Term_ Safety Sig(2-tailed)
N
1
115
702**
.000
115
.702**
.000
115
1
115
Source: Author’s computation, 2021. ** Correlation is significant at the0.01 level (2-tailed)
The stated significant relationship is affirmed by the work of Capgemini (2011b), and Rose
(2013) in which they further support the ratings by the regulatory bodies so as to ensure
satisfaction of the customers because effective assistance provides quality outcomes and
improve the norms of protection industry in the nearest future. The study however augured that
most of the staff and the employees in the industry hardly abide by the rules, procedures and
regulations which is not only against the ethical codes of the industry but also has not attracted
adequate corresponding punishment.
CONCLUSIONS, RECOMMENDATIONS AND FURTHER RESEARCH
This study attempts to examine poor claims settlement and demand for insurance policies in
Nigeria with the Nigerian insurance industry as research ground for its empirical assessment.
The findings have shown the importance of the different cycles of claims on the board. Insurance
business entails such market that requires transparency in all forms ranging from inception
when the customers are being introduced to the financial sector and files or documents opened
down to when they are claiming indemnities according to the terms of the business. All the
medium transactions such as processing of customers file or records as well as access to them
and how they are being treated should be honestly explained to the customers including all the
premiums charged/required to be paid at every point in time otherwise , there would be problem
ab-initio which will create negative perception of insurance business as well as delay in the
claims on the parts of the parties in the long run .It has so far confirmed that great case handling
of good claims is vital to back up plans' benefit and long term profitability and sustainability of
the industry.
For policy requirement of insurance industry should be redefined through appropriate Acts
introducing competitions and innovations in the services so as to compete effectively and meet
consumer needs by dealing with changing expectations of policyholders. Appropriate agencies
might also need to be established that will continue to look into the grievances and complaints
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 4, April-2021
Services for Science and Education – United Kingdom
of the customers/policyholder in order to regulate the misconducts of the officers and desired
punishments attached accordingly.
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