EFFECT OF CLAIM SETTLEMENT ON PROFIT MAXIMIZATION IN THE INSURANCE INDUSTRIES (A CASE STUDY OF NICON INSURANCE COMPANY)

ABSTRACTThis project work has critically highlighted the compact of claims settlement on profit maximization in insurance industry, the problems of effective claims settlement in Nigeria have been identified and how they can be controlled is also included in the study.  Also circumstances given rise to claims, fraudulent claims and effect of inflation on claims settlement have been discussed and ways to solve them are indicated in the study.  This study also examines the lapses and recommends some viable points that can also contribute to the image of the industry.  In conclusion for effective claims settlement to arise, the insurer and the insured must agree as to the actual amount to be paid in the event of claims taking into consideration the principles and the risk guiding the handling of insurance claims.
TABLE OF CONTENTSTitle PageiApproval PageiiDedicationiiiAcknowledgement ivAbstractvTable of Contentvi
CHAPTER ONE: INTRODUCTION1.1Background of the Study 11.2Statement of Problems 61.3Objective of the Study 81.4Research Question91.5Hypothesis91.6Significance of the Study 111.7Scope of Limitation of the Study 121.8Definition of Terms13
CHAPTER TWO: REVIEW OF RELATED LITERATURE2.1Introduction 162.2Classification of Insurance172.3Principles of Insurance 222.4Notification of Claims 242.5Investigation of Claims 242.6Circumstances given rise to Claim252.7Claims Report262.8The Problems, affecting effective claims settlement in Nigeria262.9Negotiating an Insurance Claim Settlement282.10Negotiating Your Car Accident Insurance Settlement312.11How to Claim Life Insurance Settlement 37References 40
CHAPTER THREE:  RESEARCH DESIGN AND METHODOLOGY3.1Research Methodology41 3.2Research Design413.3Methods and Sources of Data423.4Population423.5Sample Size443.6Sample and Sampling Technique 453.7Instrument for Data Collection453.8Data Analysis Method45
CHAPTER FOUR: SUMMARY OF FINDINGS 4.1Findings 464.2General Analysis of Questionnaire Distributed464.3Testing of Hypothesis 55
CHAPTER FIVE:  CONCLUSIONS AND RECOMMENDATIONS5.1Conclusions575.2Recommendation58Bibliography 60Questionnaire 61
1.1BACKGROUND OF THE STUDYNational Insurance Corporation is a corporation brought into being on July 1, 1968 by Cap 263, Laws of the Federal Republic of Nigeria (LFN) of 1990 as amended (hereunder referred to as NICON Act).  NICON Assurance Plc was incorporated on Oct 2001 and a private treaty which became effective in October, 2001.  NICON Assurance Plc acquired the business (assets and liabilities) of national Insurance Corporation of Nigeria (NICON or the corporation).  This acquisition is to the extent, to set out the transaction and in exchange for which 1,000,000,000 shares of NICON Assurance Plc was issued to the ministry of finance in corporate as the sole shareholder of NICON.  The name was changed to NICON insurance Plc.NICON on creation by law had initial share capital of two million naira divided into 20,000 ordinary shares of N100 each to be held exclusively by the Federal Government of Nigeria.  Since then, the share capital of the corporation has been increased several times through capitalization of profits.  Federal Government’s shares held are on its behalf by the Federal Ministry of Finance incorporated, the federal government’s investment vehicle.The corporation’s share capital now stands at one billion naira divided into 5000,000 ordinary shares of N200 each.  Under the NICON Act, the minister can increase the share capital without limit subject to the approval of the Federal Executive Council.Today National Insurance Corporation of Nigeria carries out its business under the style and the name of NICON Insurance Corporation.Prior to the establishment of the national Insurance Corporation of Nigeria (NICON), the Insurance industry was largely made up of foreign owned insurance companies whose business operations did little to foster the economic and social development of the country.   Furthermore, before the enactment of the Company’s Act 1968, like most foreign companies, they operated as branches of their parent companies, which were invariably domiciled abroad.    NICON was created in order to break the domination of the Nigeria insurance industry by foreign companies were remitted abroad, thereby putting a let of pressure on the country’s balance of payment.  In 1962, an adviser to the Federal Government of Nigeria on insurance matters submitted a feasibility report on the benefits of insuring export-bound Nigeria agricultural produce. This found the basis of subsequent deliberations and recommendations on the formation of an indigenous government owned insurance company with the encouragement given to developing nations by United Nations Committee on Insurance Companies urging them to seek considerable economic independent by investing directly in critical sectors of the economy such as banking and insurance.  At the request of the government of Nigeria an insurance expert was send by the United Nations to provide technical assistance.  The establishment of a government-owned Insurance Corporation was recommended.  It was envisaged that all operating insurance companies in the country would be compelled to cede ten percent (10%) of their risks to the proposed government owned insurance company in the first phase of the corporation’s development.  The second phase of the corporations operations was expected to vest in the corporation of the sole right to insure government properties by which time it was believed, the corporation would have acquired by the requisite technical and administrative skills and some experience in re-insurance.However, NICON was by stature at inception given the sole right to provide insurance cover for all government asserts statutory corporations and state owned companies and with the powers to under-take re-insurance business.