Impact of Poor Claims Settlement on the Demand for Insurance

ABSTRACT The study examined the impact of poor claims settlement on the demand for insurance. The area of the study was Nigeria. The specific objectives of the study were to examine the significance of life insurance claims settlement on demand for insurance in Nigeria; to assess the significance of fire insurance claims settlement on demand for insurance in Nigeria; and to evaluate the significance of oil and gas insurance claims settlement on demand for insurance in Nigeria. An ex-post facto research design was used in the study. The three hypotheses formulated were tested using the Ordinary Least Squares regression technique at 5% level of significance. It was found that Life insurance claims settlement had no significance on demand for insurance in Nigeria. The p-value at 0.2796 was higher than the level of significance of 0.05. Next was that Fire insurance claims settlement had no significance on demand for insurance in Nigeria. The p-value at 0.0730 was higher than the level of significance of 0.05. Also, Oil and Gas insurance claims settlement had no significance on the demand for insurance in Nigeria. The p-value at 0.8621 was higher than the level of significance of 0.05. Based on the findings of the study it was concluded that life, fire, and oil, and gas claims settlements had no significance on demand for insurance in Nigeria. Therefore, it was recommended that the insurance industry should collectively make the public aware that it actually settles life insurance claims, as well as other genuine claims. Also, increasing the amount of interaction between the insurance industry and the informal sector through direct and personal marketing will draw more persons from the informal sector into buying fire insurance. Finally, the Local Content policy of Nigeria covering marine insurance should be adjusted to increase the percentage of insurance due to local insurers on oil and gas as well as give the industry the right of first refusal for any oil and gas business in the country