Nigerian Journal of Banking and Financial Issues (NJBFI)

IMPACT OF PREMIUM RATING ON PREMIUMS INCOME AND PROFITABILITY OF FIRE INSURERS IN PRE COVID-ERA: THE NIGERIA EXPERIENCE

Abstract

The assessment of fire insurance ratings plays a critical role in evaluating the risks associated with fire-related incidents for insurers and policyholders. The study aims at analysing the premium rating on premium income and profitability on fire insurance ratings in Nigeria during the pre-COVID era for the past 20years, offering key insights into the dynamics of the industry. The study used a secondary data analysed via statistical software (e-views), the research employs descriptive and inferential statistics, including multiple regression and effects models, to test regarding the performance of fire insurers; Study employed a judgmental sampling technique and data were limited to full firms audited financial statements from 15 licensed insurance companies over a 20-years ranging (1999-2019) for firms with a complain and update audited report. Therefore, the research findings uncovers significant disparities in financial indicators, revealing a market dominated by a few companies in areas like premium rating and income. This finding indicates that the Premium Rating of insurance companies increases proportionally with the Premium Income they receive. The study also establishes a strong correlation between adequate premium ratings and factors such as investment portfolios, profitability, and capital adequacy. Hence the study recommended that insurances companies should implement strategies that enhance profitability while maintaining adequate premium ratings to ensure long term sustainability and market stability.