Role of Claims Settlements in the Growth of an Insurance Company.

Role of Claims Settlements in the Growth of an Insurance Company.

CHAPTER ONE

OBJECTIVE OF THE STUDY.

The major aims of this study is to investigate the role of claims settlements in the growth of an insurance company.

Therefore it specific objectives include

To study the meaning of claim settlement
To study the causes of delay in claim
The researcher will also evaluate the problems of the effects of government restriction to insurers to invest their funds.
To examine the impact of claims settlement in growth of an insurance company examine the challenges of claim settlement.

CHAPTER TWO

CONCEPTUAL REVIEW OF RELATED LITERATURE

CLAIMS ADMINISTRATION

Claims management is a very important aspects of an insurance company’s administration. The insurer has promised the insured or his beneficiary the payment of a determined or determinable sum of money, or legally agreed damages, if the peril insured against operates giving rise to a loss or injury. This promise has to be made good whenever a genuine claim is brought before or against the insure. Failure to honour the promise may have detrimental effect on the insurance company by doing damage to its reputation and by possible cross of future business. (Adeyemi: 1992).

It is a statement of truth to say that the insurer is just a trustee for the accumulated premium fund. While the beneficiaries of the insure and/or their nominated estate of their assignees, in addition to the insurer’s shareholdersare entitled to the surprises.

According to Ahiczu (1996) only genuine claims proscimately caused by the covered peril and in according with the terms of the policy should be settled. As a trustee to the insurance, the insurer guard against reckless case of the funds and promote present settlement of claims.

An insurer involved in extravagance in payment for losses is sure to wind up son, thus neither an unreasonable repudiation of liability nor indiscriminate settlement of claims is a healthy practice (Ojukwu) so it the insurer ensures that no overpayment occurs, and inversely that genuine claims are promptly paid, it would be doing itself and the whole insuring community a lot of good. So, both insurer and then insured have their respective duties to carry out so as to ensure the proper performance of the insurance contract.

CLAIM SETTLEMENT PROCEDURE

Claim settlement generally follows the under listed steps in all insurance companies. The claims conditions are laid down in all insurance policies. The insures/clamant should follow the stated procedure which include the four (4) steps.

The claim or loss is notified to the insurer.
The insurer demands proof of loss.
Investigation is carried out by insurer and
Settlement follows.

NOTIFICATION OF LOSS

The claims condition in all policies contains a statement, the effect that insured should set the claims procedure motion by giving a notice to the insurer of the occurrencea covered loss. The normal prescribed mode of this notice is in writing but there is also provision that the insurers office may be telephone directly, or informed through the agent or broker who introduced the or by his solicitor or representative. Policy condition differ armoring policies, but it is usual to stipulate a period of time within which the insured must notify the insurer of the loss.

Prompt notification is necessary so that the insurers are able to quick actions, to protect the accidental property of life from further degeneration as well as safe guard their other in interest.More importantly, prompt report assists the insurer to make the required investigations that will authenticate the claims, and where possible make recoveries. Failure to report the loss as stipulated in the policy condition is a breach of the insurance contract, which permits the insurer to repudiate liability. Whether repudiation is done or not in any particular case depends on the disposition of the minds of the insurers concerned. The insurer may take the following a notification of loss.

CHAPTER THREE

RESEARCH METHODOLOGY

RESEARCH DESIGN.

Research design, according to Uba, Ochrienta and Nwonu 92012) is defined as the framework or plan that is used as a guide in collecting and analyzing the data for the study.

The research work is the “survey method” survey can be defined as the investigation of the behavior, opinion or other manifestation of a group of people by questing them.

The survey may involve all or some of them and hence the associated concept of population and sample survey.

Research is an old method of investigation and the best available method to social researcher. Individuals are usually the unit of analysis as they will constitute the respondents to the question to be asked. The study used structured questionnaire as a method of data collection.

SOURCES OF DATA

Primary data: this was done through interviews, administering of questionnaire to the people on observation. The data collected by the researcher is the direct information received by the researcher from employees of companies.

Secondary data: the secondary source of data entails information collected by the researcher from already existing materials that are related to this topic of study. Hence, the secondary data for this study was obtained from published and unpublished textbooks, journals, magazines and gazettes of the existing documents.

CHAPTER FOUR

PRESENTATION ANALYSIS INTERPRETATION OF DATA

Introduction

Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

Introduction

It is important to ascertain that the objective of this study is to ascertain the role of claims settlement in the growth of an insurance company.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of settlement of claims or indemnity by insurance companies

Summary

Claims management is considered to be one of the most valuable possessions of any insurer. It is one aspect of insurance practice, the handling, which can make or mar the image of Insurance Company. In fact, one of the principal functions of Insurance is the settlement of claims because it is the fear that a loss might occur that induces individuals and economic institutions to take out Insurance policies. The problem of running an effective claims administration that would satisfy the customers, thereby earning the confidence of the customers and consequently inducing repurchase. There was therefore a need to carry out a research with a view to finding out a more efficient and effective method of handling claims that will meet customers‟ satisfaction and in turn, redeem the sinking image of the insurance companies in the eyes of the insuring public, pave way for better performance and hence contribute to the economic development of Ghana. The emphasis here was to investigate the relationship between fast claims settlement and the sales and marketing of insurance products. Due to the constraints of time, the inability to measure the level of demand using the total sales and marketing figures of the selected company and the fact that the total amount of 93 claims settled as reflected on their financial statements is not a true reflection of the extent of customer satisfaction in the claims service provided by the insurers, the researcher relied more heavily on the responses from the insured who were randomly picked from the company’s clientele

Conclusion

Even though the demand for certain insurance policies might have been affected by contractual and legal requirements such as Bond, Motor, Workmen‟s Compensation Insurances etc, the results of the analysis of data as presented in chapter four showed that prompt and satisfactory claims settlement has positive effects on the sales and marketing of insurance products and vice versa. This confirmed the supposition by the researcher that the dented image of the insurance industry in the West African sub-region and the consequent effects on the economies of Nigeria may not be unconnected with the poor claims administration. This inference drawn from the results of the analysis of the study data is supported by opinions strongly held by some authorities; In a paper presented before the Image Committee of the Chartered Insurance Institute of Nigeria (CIIN), Irukwu (2000) concluded that, “claim settlement must be done promptly and equitably because the best form of advertisement for insurance companies is prompt claims settlement.” Several years earlier, Green (2000) in his write up in Annals of the Society of Chartered Property and Casualty Underwriters stated that, “Public perception of the industry (Insurance) is bound to affect the attitudes of the insuring public.

Recommendation

The problem of claim settlement has plagued the Insurance industry in Nigeria for a long time giving it a poor image. This poor image is due to the complex and peculiar nature of the insurance business. However, there is the need to improve on the image of Insurance Company, which will lead to the growth of the company and the insurance industry as a whole. From this research findings and conclusions, it has been established that claims administration affects the sales and marketing of insurance products. Consequently, measures directed at running efficient and effective claims administration would go a long way in addressing the image problem of the industry. It is in line with this that the following recommendations are made:

Claims must be settled promptly and equitably in order to earn the confidence of customers and to retain their loyalty. Reducing documents required to process a claim and minimize correspondence and claims communication and reporting could do this.

Reference

Anders, Et al. (2004). “Improving the customer orientation process”, paper submitted to Sloan management,
Appleton, J. (1989), Claim Administration-Principles & Practices, Second Edition, International Claim Association Publication, pp 3-13.
Aryeetey, E and Fosu, A. (2000), Economic Growth in Ghana; 1960 -2000, Ghana, pp. 1-5
Association of British insurers (1993), Insurers’ Campaign against Fraudulent Claims – Launch of Comprehensive Loss Underwriting Exchange Clue. United Kingdom.
Association of British insurer‟s Annual Report (2000), Tackling insurance fraud-law and practice. United Kingdom. Association of chief police officers. (March 2007). The Nature, Extent and Economic Impact of Fraud in the United Kingdom. United Kingdom.
Barlow, Lyde and Gilbert (2004). Tolley’s Insurance handbook, 3rd edition, Lexis Nexis, UK, pp 83 – 92
Brear, S. (2004), Chartered Insurance Institute (CII) Course book, UK, Personal lines Insurance, CII learning solutions, pp 14/9-14/17.
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Bruis, A. (2000), Alternative Insurance Marketing through the Internet and other Emerging Information Technologies, pp. 69-80
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Chartered Insurance Institute (CII), Claims Faculty Research Report, 2007 pp 1-18.
Chiejina, E. (2004). Foundations of Insurance Law, Agency and Salesmanship, First Edition, Mbeyi and Associates (Nigeria) Ltd. Lagos, Nigeria, Pp 170

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