Nigerian Journal of Banking and Financial Issues (NJBFI)
EXPLORING THE NEXUS BETWEEN CLAIMS MANAGEMENT AND CAPITAL ADEQUACY OF SELECTED NON-LIFE INSURANCE COMPANIES IN NIGERIA
Keywords:
Claims Reserve, Loss Ratio, Over-reserving, Under-reserving, Risk-Based Capital, Rule Based-CapitalAbstract
The study investigated the relationship between claims management and capital adequacy of non-life insurance firms in Nigeria. The study employed expost facto research design. The population of the study comprises of forty-nine (49) non-life insurance companies in Nigeria out of which ten (10) insurance firms were selected based on market share. The hypotheses of the study were analysed with the aid of simple and multiple regression analysis. The first finding of the study revealed that loss ratio significantly but negatively affects capital adequacy. Also, the second finding revealed that claims reserves significantly and positively affect capital adequacy. In addition, the third finding showed that loss ratio and claims reserves jointly have a significant effect on capital adequacy. It was concluded that claims reserve offer more beneficial effect on capital adequacy when compared to loss ratio. It was recommended that Non-life insurance firms in Nigeria should employ data analytical tool to study past losses and predict future trend. This will assist the firms in predicting loss ratio and give them a cue on how to make adequate reserve
