EFFECTS OF CLAIMS SETTLEMENT ON PROFITABILITY OF INSURANCE COMPANIES IN NIGERIA

Abstract

This study examined the effects of claims settlement on the profitability of insurance companies in Nigeria, as evidenced in Leadway Assurance Plc. Secondary data was generated from the financial statements of Leadway Assurance, Nigeria Plc from 2013 to 2022. The study adopted descriptive statistics and simple regression method of data analysis to examine the relationship between the variables in each hypothesis with the aid of Statistical Package for Social Sciences, SPSS version 24. Results from the study revealed negative relationship between claims settlement and return on assets, claim settlement and return on capital employed and claim settlement and earnings per share. This means that claims settlement has a negative relationship with profitability of insurance companies in Nigeria. Based on the results, the study recommended that insurance companies need to develop strategies on claims payment reduction so that they can have more profit to reinvest to increase their performance. Also, insurance firms should ensure that claims settlement is well manage in order to enhance profitability and wealth maximization., this can be done by paying only genuine claims and making sure that fraudulent claims are repudiated.