AN EMPIRICAL INVESTIGATION INTO THE RELATIONSHIP BETWEEN PREMIUMS AND CLAIMS PAID IN THE NIGERIAN INSURANCE INDUSTRY: A 2000-2017 ANALYSIS

This study is an investigation into the relationship between premiums received and claims paid in the Nigerian insurance industry over the period 2000-2017. Data on gross premiums received and gross claims paid over the period were gotten from the Central Bank of Nigeria (CBN) statistical bulletin, National Insurance Commission (NAICOM) and the Nigerian Insurers Association (NIA) annual reports. Stationarity test carried out on the data reveal that data is stationary at the 1%, 5% and 10% levels of significance. The cointegration test reveals that no cointegration exists among the variables which imply that there is no long run equilibrium relationship between the variables. Using the ordinary least squares regression, the calculated probability value of 0.167 is higher than the 0.05 significant value, hence we accept the null hypothesis that there is no significant relationship between claims paid and premiums received in the Nigerian insurance industry. The coefficient of determination (R2) of 0.91157 indicates that gross premiums contribute 91.2 percent to variations in gross claims while the remaining 8.6 percent is owing to factors outside the regression model. We therefore conclude that claims paid by insurers is not a function of premiums received and recommend that insurers should endeavour to settle claims promptly and equitably to increase client satisfaction

Micro-Insurance: A Veritable Product Diversification Option for Micro-Finance Institutions in Nigeria

Safe-guarding the poor and low-income people from the financial hardship arising from the occurrence of supposedly insurable risks informs this study. This challenges the widely believed concept of the ‘non-insurability’ of the poor, owing to their inability to pay huge premiums. This study therefore examines the concept of micro-insurance and its applicability in Nigeria. Micro-finance banks, which presently provide mainly micro-credit and savings products targeted at the low-income group, are considered an appropriate facility for the micro-insurance product. The Integrated Theoretical Review Design (ITRD) with focus on archival review and document analysis is adopted for the study. This review brings to the limelight the fact that micro-insurance is relatively new and only remotely practiced in Nigeria. One of the reasons for this is that Micro-finance Institutions are short of appropriate models on which to present their offer. To this end, this study proposes the Community based/mutual micro-insurance model for Nigeria as an effective way of reaching the rural and semi-urban population who mostly fall under the low-income group. Effective and efficient enlightenment programmes on micro-insurance for the low-income people is also encouraged. Keywords: Micro-finance, Micro-insurance, Micro- entrepreneu

Pension Administration and Capital Formation in Nigeria: The Challenges

Pension issues affect both public and private sectors of any economy. The primary objective of pension scheme is to ensure the retiree’s standard of living is smoothened after retirement to have normal living. It is also to provide retirement benefit to retirees, moreso, to provide uniform guidelines for administration and payment of benefit. The pension scheme could be funded by contribution(s) either by the employer or the employee or employer/employee contribution. Pension scheme provides retirement benefit including incentives to employees. But despite the vital role of pension scheme to sustain better living after retirement, the scheme is not reasonably sensitized. Particularly, the private sector employers are unable to provide retirement benefits to their retirees, this is traced to weak legitimate laws on pension. Besides earnings on pension funds are not accessible to retirees. In conclusion, effective pension administration and capital formation is capable of industrializing the Nigerian economy. Therefore, it is recommended that defined pension contribution should be encouraged with effective legal backing for maximum result to retirees and growth of the economy. Keywords: Pension administration, Retiree, Retirement benefit, Pension contribution, Investment decision

FINANCIAL RISK AND THE VALUATION OF LIFE INSURANCE COMPANIES IN NIGERIA: A 2008 – 2017 ANALYSIS

This study is an attempt to investigate the relationship between financial risk and the valuation of life insurance companies in Nigeria. Financial risk being the risk organizations are exposed to in financial markets is represented by liquidity risk and interest rate risk while the value of the life insurance industry is assessed through the return on equity and the combined ratio. The authors seek to achieve two objectives which are to determine the relationship between changes in interest rate and the combined ratio and to investigate the relationship between liquidity risk and the return on equity of life insurance companies in Nigeria. The expost facto research design is adopted for the study and biannual data is sourced from Nigerian Insurers’ Association (NIA), CBN Statistical Bulletin and World Bank database spanning through 2008 – 2017. Descriptive statistics, stationarity tests, and cointegration tests are carried out on the data to test the suitability of the data. Hypothesis are tested through regression analysis which reveals that whereas there is a significant relationship between interest rate risk and the combined ratio, there is no significant relationship between liquidity risk and the return on equity. It is therefore recommended that life insurers should adopt a risk-based approach in their operations to enhance the value of the sector. An effective inculcation of appropriate risk management practices would help the insurer to identify internal and external risks which are likely to pose challenges to the value of the life insurance industry. JEL: G22; E43 Article visualizations

Reinsurance and the determinants of the ceding decision of life insurance companies in Nigeria : an empirical analysis

PURPOSE: This paper is an empirical analysis of Nigeria's determinants of the ceding decision of life insurance companies. It is birthed from the notion that reinsurance, though highly beneficial to the insurance industry, is rarely undertaken by life insurers. Thus, this study aims at expounding on the determinants of reinsurance decisions of life insurance companies in Nigeria and the relationship of each determinant with ceded reinsurance.METHODOLOGY: An ex-post facto research design was adopted, and a sample size of seven (7) core life insurance companies in Nigeria was selected using the purposive sampling technique. Data were sourced from the Nigerian Insurers Digest and the websites of the select insurance companies covering the years 2011 to 2019. Descriptive analysis and unit root tests were conducted on the data to justify its suitability. Data were further analyzed using the panel data regression, and a decision was arrived at using the Hausman and redundant fixed effect tests.RESULTS/FINDINGS: The analysis showed a significant relationship between leverage and ceded reinsurance, firm size and ceded reinsurance, as well as return on assets and ceded reinsurance, while underwriting risk and reinsurance price had insignificant relationships with ceded reinsurance. All the explanatory variables also had positive relationships with the ratio of ceded reinsurance. Thus, it was concluded that leverage, firm size and return on assets are major determinants of the ceding decision of these companies, while underwriting risk and reinsurance price are not.ORIGINALITY AND PRACTICAL IMPLICATIONS: This study is an original work of the authors. It practically shows the relationship between the factors considered by life insurers in deciding to cede their risks and ceded reinsurance. With previous studies on reinsurance and its benefit to the insurance industry, this study brings factors that impede the life insurer from deriving these benefits. Therefore, it was recommended that to encourage life insurers to cede more risks, policymakers and regulators should align specific regulations on leverage, firm size and return on assets of life insurers in Nigeria.peer-reviewe