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Abstract
The study examines the role of insurance claims in Nigeria. This study adopts the survey research designed to evaluate the problems and prospect of claim administration in Nigeria, therefore the research design adopted in this study is the exploratory research design.The populations of this study include all the registered insurance companies transacting motor insurance business in Nigeria.The study covers selected insurance firms in Port Harcourt which include Corner Stone Insurance PLC, 180 Aba Road, Mutual Benefits Insurance PLC, Aba Road, and Leadway Assurance Company Limited all in Port Harcourt, Rivers State.The simple random sampling technique is used in the course of this research work. It implies that each member will have an equal opportunity of being selected. That is it allows equal probability that each elementary unit will be chosen. The simple random was used by the researcher to select Corner Stone Insurance PLC, Mutual Benefits Insurance PLC, and Leadway Assurance Company Limited all in Port Harcourt, Rivers State.The data used for this study was drawn from both primary and secondary sources.The main instrument for the study is self designed questionnaires on problem perceived by staff and managers as related to claim management procedures in life assurance companies in Nigeria.The researcher used simple percentage to analyze the data on table.It is evident from the study that claim settlement approach of the Nigerian insurance industry can greatly affect its likely development pattern. The study recommends that Adequate reason should be put forward to any claim rejected by the company and life assurance companies should maintained disciplined claim official to avoid settlement of claim based on sentient or nepotism rather than on laid down rules of the company.
CHAPTER 1
INTRODUCTION
1.1 Background of Study
Insurance is a safe-guard against risk. Any device aimed at reducing the chances of a risk occurring when it happens, reducing the extent of its damage and providing the affected persons with compensation is a form of insurance, (Enwerezoir, 2000).
Often times, situations that arise from loss events awake the insuring populace towards the need for protective measure. However, claims are noted as the most critical channels and adefining link that shape the overall perception of the customers towards their insurer(Crawford, 2007). According to Capgemini, (2011) the claims processing is the mirror to thecustomer that enable the insurers’ drive at improving customers’ acquisition, expectation,retention and business’ insight for product enhancement and company’s profitability.
Therefore, the drive, accuracy, efficiency and effectiveness of claims managerial proceduresis key for cost control, risk admistration and meeting expectation needed for proper portfoliounderwriting (IBM, 2011).
Insurance as a modern concept for solving risk related problems depends on cooperation of a large basic fundamental of insurance (Udeze,2005).
According to Aneke (2004) claims in life assurance is a demand by a person or persons to recover under a policy of insurance for the loss which may arise within the policy.
Also a renowned scholar of insurance Epectinchin, (1998) in his study defined insurance claims as the right of the insured to ask for compensation from the insurer should any loss occurs.
An efficient and prompt claims settlement services is the most effective form of advertisement for an insurance company. But this does not mean that the insurance company must settle all claims whether they are genuine claims or not. According to Irukwub (1997) only genuine claims covered by the terms in the policy should be settled and then must be done promptly and equitable.
Claims admistration therefore involves settling losses under that assurance contracts and adjusting any difference that arises between the company’s policy holder and possibly a third-party. Claims settlement on its own means not just money or compensation extended to the policy holder who suffered a loss but refers to the whole process involved in receiving the processing and documentation of claims form to decide if payment is to be made or not and how it should be made.
The reason is because the process takes time and involved some monetary cost, and this add to the overall cost of settlement which in the early state much attention was given to claims administration as a dominant of purchasing claims by the members of the public, this was because it was assumed that the public is aware of the claims that would afflation and those that would not. It should be remembered that any company that must be able to carry out its function must have a good reputation and trust among the populace, but this has continued to decline over the years and given insurance practitioners and firms great concerns but for the current reforms in the sector by the government with complexities in policy from in the likes of confused wordings there could be incidence where eligible claims could be denied by company based on the condition or warranting. These have led to more attention being on claims admistration since a dissatisfied insured can decide not to insured again with that company or refuse insuranceentirely. He can resort to litigation action or even take other actions which will darken the image of insurance before other prospective insured who may decide not to insure the risk again.
However, all assurance policies contain a condition which lay down the procedure to be followed in the interest of the company with procedures. The general procedure involved in the admistration of claims includes the notification of claims, proof of loss and settlement of claims. (Oluoma 2000).
1.2 Statement of the Problem
Managing claims effectively is a complex task. Despite its many steps and variations in each process, most Nigerian insurance companies struggle to consistently improve claims operations. This may not be unconnected with the poor claims process and non-recognition given to the staff of the department in the industry.
Given that the claims experience is a primary driver of policyholder satisfaction and loyalty, there is need to have a virile claims department headed by a seasoned technocrat who will deliver high quality experience and equally cut costs. A major way of cutting cost is by identifying genuine and fraudulent claims. Pesout and Andrle, (2011) posit that frauds in insurance are one of the major sources of operational risk of insurance companies and constitute a significant portion of their losses. Dionne, (2000) provides many reasons for insurance fraud such as changes in morality, poverty,behaviour of the intermediaries, insurer’s attitude and nature of insurance contract. Due to these anomalies, roles of claims managers need to be expanded to detecting fraudulent claims and minimizing the overhead cost of the company.
In order to bring this argument into proper perspective, we seek to assess the effectiveness of the current role of the claim manager in some of insurance companies in Nigeria. Hence the study seeks to examine the problems and prospects of motor insurance claim administration in Nigeria.
1.3 Objectives of the study
The main objective of the study is to examine the problems and prospects of motor insurance claim admistration in Nigeria. The specific objectives are as follows;
1. To examine the extent to which claims administration procedures impacted positively on motor assurance companies in Nigeria.
2. To examine the extent to which claims administration procedures create awareness for effective motor insurance policy in Nigeria.
3. To examine the problems faced by claim administrator motorinsurance companies in Nigeria.
4. To proffer solutions to the problems of claimsadministration in motor insurance companies in Nigeria can be improved.
1.4 Research Questions
1. To what extent do claims administration procedures impacton motor assurance companies in Nigeria?
2. To what extent does claims administration procedures create awareness for effective motor insurance policy in Nigeria?
3. What are the problems faced by claim administration by motor insurance companies in Nigeria?
4. What are the solutions to the problems faced by claims administrators in motor insurance companies in Nigeria can be improved?
1.5 Research Hypotheses
H0: There are problems of claims administration in Nigeria.
HA: There are prospects of claim administration in Nigeria.
1.6 Significance of the Study
This research work will be meaningful to the insurance company because certain guidelines, rules and regulations, recommendation given here to enable them act accordingly.
Also the government will benefit because if the rules are followed as outlined, it will go a long way to awaken our economy.
When the appraisal of claim administration procedures in motor insurance companies in Nigeria is adopted our economy will not be at a standstill. The government, insurer and the insured will be satisfied.
This study gives the insuring public, the necessary awareness of the insurance services as they will reduce the loss of confidence in them. Insurance scholars will also benefit from the work, because the procedures adopted will improve the sector.
1.7 Scope of the Study
This study covers Port Harcourt metropolis therefore the study is aim at analyzing the appraisal of claimsadministration procedures of motor insurance companies in Nigeria, this area of coverage of this study is thus limited to the claims department of motorinsurance companies in Nigeria. It attempts to provide the framework of working condition for the management in an ordinary manner. The study limits scope to some selected insurance firms in Port Harcourt which include Corner Stone InsurancePLC, 180 Aba Road, Mutual Benefits Insurance PLC, Aba Road, and Leadway Assurance Company Limited all in Port Harcourt, Rivers State.
1.8 Limitation of the Study
One of the limitations of this study is the problem of time constraints; this is because the duration given for the completion of this research is too short compare to the nature of work needed to be done. Also financial adequacy is another crucial limitation of the study, which hampered few necessities of the study to be decently successful.
1.9 Definition of Terms
Adjuster: A person who adjusts losses investigates its cause’s pressures the salvage.
Agent:A person, who acts on behalf of another.
Appraisal:This is the action of judging the value, quality or nature of something.
Arbitration:This is an alternative to litigation for settlement of disputes as regards the amount to be paid under the policy after the occurrence of loss
Claims: A demand by the insured upon the insurer to fulfill his guarantee of indemnity by reason of an accident in respect of the insured property.
Claims Form: Form filled to notify the insurer by the insured that the event insured against has occurred.
Claim Appointment: The method of rationing claims in proportion of degree cost suffered.
Claimants: Is a person who is legalized to collect payment insuring public. These are the client of the life assurance companies that participate in insurance business.
Clams procedure: This is condition which the insured should fellow to ensure settlement of claims.
Impact: This mean to have a strong effect on someone or something.
Policy: Document evidencing the existence of the contract between the individuals and the life assurance company.
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