This project work has critically highlighted the compact of claims
settlements on profit maximization in insurance industry, the problems
affecting 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 inductive in the study.
This study also examines the lapses and recommends some viable
point (s) 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 CONTENT
1.1 Background of the study.
1.2 Statement of problem
1.3 Purpose of the study
1.4 Significance of the study
1.5 Limitation of the study
2.0 The Review Of Related Literature
2.1 Classes of insurance
2.2 Principles of insurance
2.3 Notification of claims
2.4 Investigation of claims
2.5 Circumstances given rise to claims
2.6 Claims report
2.7 Claim settlement under individual
2.8 The problems affecting effective claims settlement.
3.0 Research Design And Methodology
3.1 Source of Data
3.2 Location of Data
3.3 Method of Data collection
5.0 Recommendation And Conclusion
PURPOSE /OBJECTIVE OF THE STUDY
1. To find out effect of unsettled claims on profit
maximization in the insurance industry
2. To find out weather creation of disputes on
insurance contracts is one of the claim settlements on profit maximization.
3. To find out weather claim settlement involving
policy holder on default has any effect on profitability in insurance industry.
4. To find out the effect of claims concerning
third party insurance and profit maximization.
5. To find out the effect of prompt settlement on
claims on profit maximization in insurance industry.
And that is why the research has decided to come up with the following
1. What is the effect of unsettled claim on profit
maximization in insurance industry?
2. What is the cause of disputes among the insurer
and the insured on claim settlement in insurance industry?
3. What is the effect of claim settlement on profit
maximization on the side of policyholders in case of default and on the
4. What is the effect of claim concerning third
party insurance and profit maximization?
What is the effect of prompt settlement claims on profit
maximization in insurance industry?
1.1 BACKGROUND OF THE STUDY
remember a definition which I was forced to cram in my first year by Mrs. Helen
Ibeabuchi she defined insurance as an economic path towards unlimited
opportunities for financial growth and fulfillment in life through protection
and security. Winston Churchill once referred to insurance as “ bringing the
magic of averages to the rescue of million”. This magic is the outcome of
voluntary economic co-operation by human beings. Before this was the working
out of the law of average which tells the probability or chance that an event
will or will not happen.
Insurance is an arrangement by which one party (the insurer)
promises to pay another party a sum of money if some thing unexpected should
happen which causes the insured to sustain a financial loss.
The responsibility for paying such losses is then transferred from
the policyholder to the insurer. In return, for accepting the burden of paying
for losses when the events occur, the insurer charges the insured a price, the
insurance premium the development of the insurance premium.
This development of the insurance industry in Nigeria data back to
Further more, growth was not phenomenal until the Nigeria economy
of the 60’s and early 80’s often described as the “ mushroomery era” of the
market, obviously, a lot of the malpractices especially on claim settlement
crept into the industry, which the earlier laws of 1961 and 1965 could not
effectively cope with. There were cases of insurer denying liabilities on the
robbery of a car on the ground that only theft cover is granted.
The creation and maintenance of a good public
image presents continuing difficulties and much still remains to be done. Also
the danger of not appreciated by the public. Little general information is
available in other field such as public liabilities, contractor, and all risk
In spite of this, the regulation of any insurance company depend
to a large extent on the sort of claim service rounded by the company.
An unreliable and inefficient claims department
could rain the reputation of a company once they discover that the company is
reluctant to pay or delays payment without good reason of their genuine claims.
In order to guard against delay in the settlement of claims the
insurance decree of 1976 list some condition under which the director of
insurance may council the certificate of registration of an insurance company.
Therefore, an insurance who makes it a matter of regular practice of delaying
claim payment may stand the risk of having his license canceled.
1.2 STATEMENT OF PROBLEM
The very nature of insurance makes the creation of a good image a
difficult task. The theme “that insurance provide security and peace of mind”
is a good one but basically we have nothing than a piece of paper to offer
which promises to pay if…
“Out difficulties in promoting confidence arising from the
a. Insurance is so intangible and in many cases it has to be
explained on a secure public interest by legible product such as a car which
can provide immediate benefit and enjoyment.
a.Insurance is highly technical: A policy is a
contract which has to be carefully warded and misconceptions and doubts easily
arise in public minds. Many people say that policies are written I deliberate
a. The need for insurance is not really recognized
more insurance is sold than it’s bought.
b. Insurance are not always able to accept
proposals, from all the soundly elements of selection often present.
c. The value of insurance, not only to the individual
but also to the economy of the country, is not easily appreciated by the
general public. The fact that insurance is a export is slowly becoming known
but parts played by branches such as find protection and aims protection are
still not widely known.
The public is slow to recognized that in many respects,
insurance provide what almost amount to social services, a fact which is more
readily appreciated where other industries are concerned furthermore, an
unpleasant habit of non payment of premium is regrettably emerging among some
policy holders most especially the co-operations and government owned
companies. The Neagon for this unwholesome some development is that many of the
insured out of ignorance and belief relegate insurance matters to the
background in their scale of priority where expenditures are concerned.
It is quite an indisputable fact that the
industry had created some image problems for itself over recent years through
the operational malpractice of its member particularly some unscrupulous
brokers and fraudulent agents. As a result, many people perceived insurance as
a legalized robbery. With this already dented image when companies are facing
serious economic and financial problems. The answer quite clearly in
aforementioned is that the need of insurance as a means of protecting
investments has never much more manifested than now.
It is very difficult for companies. Individuals and even
government to raise new capital to invest on various project and business
Consequently, there is utmost need for every investor to take
serious steps to secure and ensure that the investment already had are
prevented from loss and distraction.
1.4 THE SIGNIFICANCE OF THE STUDY
The misconception about insurance
practice in Nigeria gives professional concern especially, in relation to claim
settlement. Average Nigerians believe that an insurance is tend to interpret
the rules to their own advantage by rejecting claims when one of these rules is
not complied with by the insured. In Nigeria, the insurers operate the rules
strictly like their colleagues in developed countries yet their image has been
dented because the average Nigeria seems not to understand the practice of
The important of this study will enable
the insuring public to know the concept behind insurance practice and the rules
guiding both the insurer and insured during the negotiation of claims. It is
the aim of this study to state clearly that insurance industry is not set up to
collect premium only but to reduce the risk where by the insured is given peace
of mind that in the event of damage or loss to his or her property, certain sum
of money will become payable.
This study will also enlighten the
general public that the insurers do investigated public policy where there is
suspicious of fraudulent and exaggerate claims in the present competitive
environment coupled with world wide recession, the implication for the
insurance industry has been substantial drop in premium income for most classes
of business and increasing incidence of claims. Therefore, insurance would not
allow an insured person to take advantage of this economic recession by gaining
that of their misfortune by deliberately damaging their property in order to
claim the insurance money.
There have been allegations of malpractices, against the insurers.
This research work would delve into such topics to determine whether they are
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