The Impact of Government Policies in Regulating the Activities of Nigeria’s Insurance Industry
Chapter One
Purpose of the study
This study aimed at examining the relationship between the government policy regulation and service quality in the Insurance industry of Nigeria.
Specific Objectives
- To examine the relationship between monitoring & supervision of insurance industry players and service quality they deliver to customers in Nigeria’s insurance industry
- To assess the relationship of the mediation role played by insurance regulatory bodies and quality of the service that the insurance companies deliver
- To examine the relationship between policy compliance and the insurance service quality in Nigeria’s insurance industry
CHAPTER TWO
LITERATURE REVIEW
Introduction
In this chapter a critical review and analysis of related literature was carried out. The purpose of the literature review was to offer a deeper understanding of the government policy regulation and the service quality from the perspective of scholars who have examined these concepts before. The sources of the literature review were research journals that have been published by recognized publishing houses. This chapter commences by discussing the overview of the mandate of the Insurance Regulatory Authority that is the monitoring and compliance to policies in place, the supervision of insurance providers and resource availability. It attempts to show how all these variables relate to service quality.
Theoretical Review
As early as the 1930s, Arthur Cecil Pigou suggested the Public Interest theory which has become a very important tool in the regulation of markets with a view to ensure that there is equity and fairness in business practices. The theory further supports the protection of the lowest social classes from fraud and dishonesty (Deegan & Unerman, 2011).One other assumption of the theory is that markets and business sectors are susceptible to mediocrity and lawlessness if they are not monitored by a higher authority such as the government or a government affiliated entity. The government should however be a neutral player and willing to promote the interests of all the interested parties in the sector but ensuring that none of them gets a raw deal. This theory has been applied to a number of sectors other than insurance for instance the banking sector (Deegan & Unerman, 2011; Posner, 1974). Another clear assumption is that markets cannot be efficient if they are only left to the players without the intervention of a state related influence. This assumption implies that there are bound to be great losses and higher risks if the government does not place some interventions and by laws for the sector players.
However, writers such as Stigler (1972) have critiqued the theory, arguing that the regulation of markets may cause inefficiencies because there is a greater potential for entry of new players and thus the existing players may exhibit all the negative traits of monopolistic firms, thereby compromising on customer satisfaction. For proper regulation of any market, the regulatory authority should have the main goal as the desire to protect the interests of the public and the stakeholders with which the insurance industry does business. The regulatory authority has to ensure that there is fairness in all aspects of the transactions between the service providers and the consumers of the services (Boadway and Bruce, 1984).
The main aspects of the regulation in the case of the insurance industry, relate to the dimensions of; monitoring & supervision, a mediating role and the compliance to the policies. The compliance is essential since it brings in an element of the legal framework which has to be followed by all players in the industry. It is thus essential to examine these three key dimensions of the insurance regulation which enable those who insure to acquire value from their efforts (Martin et al. 2007). This becomes handy in light of the need to examine the regulation and its impact on the service quality in the insurance industry.
The Public Interest Theory of regulation also reveals that the regulator should have the competencies and the capacity to conduct an audit of the players in the industry and thereby takes action where players have shown failure to meet the laid out standards in the present or future of the industry. There are several reasons why firms may mistreat customers such as when there is an increment of risk if stakeholders switch service providers, In this case, the stakeholders perceive that this risk, will be transferred to the owners of the firm if things go wrong (Gasper, 2002).
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter includes the design adopted for the study, sampling population, size of sample determined and the sample selection, the sampling techniques which were used including the procedure, data collection instruments. This chapter further details pretesting using the validity and reliability measures. Finally, the measurements of variables and the data analysis have been presented in this section as well.
Research Design
A cross sectional survey design was preferred for this study. It adopted both elements of qualitative and quantitative approaches. This data was used to make inferences about the population of interest. This design was used in this study because this was an academic study that required a short period of time to be conducted (Lavrakas, 2008). Quantitative and qualitative methods were used to help reduce on the bias. Quantitative data is numerical data that was collected and statistically analyzed to explain, predict and control phenomenon of interest. On the other hand, qualitative data gave narrative and descriptive information that explains and gives deeper insight into the problem (Amin, 2005).
Study Population
There were a total of 17 Insurance companies, 11 dealing in Non-life products and 06 Insurance companies which were identified as offering Life Insurance Services (IRA, 2015). The records for the total number of employees in the insurance sector was noted at 1,195 according to the Annual
Insurance Market Report of 2015, therefore, all targeted respondents were 1,226 in number.
Sample Size and Selection Techniques
This section explains the method that was used in determining the sample size and the sampling techniques employed in reaching out to the sample determined.
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS
Introduction
This chapter presents findings of the study which was conducted to examine the relationship between government policy regulations on service quality using the case of Nigeria’s Insurance Industry. The study examined the relationship between monitoring & supervision of insurance industry players on the service quality in Nigeria’s insurance industry; assessed the relationship of the mediation and the quality of the services in Nigeria’s insurance industry and examined the relationship between policy compliance and the insurance service quality in Nigeria’s insurance industry).
CHAPTER FIVE
SUMMARY, DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
Introduction
This chapter entails study summary, discussions of objectives set for the study, conclusions derived from the findings, and the recommendations that will help in improving service quality offered in Nigeria’s Insurance Industry based on the findings of the study. Limitations, contributions of the study and areas of further study are also suggested.
Summary
The study established a number of findings, the summary of the findings are explained here under;
The study was based on three government policy regulation attributes which included; monitoring & supervision of insurance industry players; mediation role played by insurance regulatory bodies; policy compliance and the insurance service quality in Nigeria’s insurance industry and the results indicated that, only one of the three attributes (monitoring & supervision of insurance industry players) was being done but two (mediation role played and policy compliance) are threatening the service quality provided in Nigeria’s Insurance Industry. The study established that the relationship between government policy regulation and service quality provided in Nigeria’s Insurance Industry was inadequately weak, negative and not significant.
Conclusions
Monitoring and Supervision of insurance industry players and the insurance service quality delivered to customers.
The findings of this study showed that there is a significant positive relationship between monitoring and supervision of Insurance industry players and the insurance service quality delivered to customers. Centered on the empirical results of this study, it is concluded that service quality delivered to customers in Nigeria’s insurance industry heavily relies on undertaking monitoring & supervision of insurance industry players.
Mediation role played by insurance regulatory bodies and the quality of the service that insurance companies deliver
The findings of this study showed that there is no significant positive relationship between the mediation role played by insurance regulatory bodies and the quality of the service that insurance companies deliver. Centered on the empirical results of this study, it is concluded that service quality delivered to customers in Nigeria’s insurance industry is highly affected by noncompliance to proper implementation mediation role.
Policy Compliance and the insurance service quality in Nigeria’s insurance Industry The findings of this study showed that there is no significant positive relationship between policy compliance and the insurance service quality in Nigeria’s insurance Industry. Centered on the empirical results of this study, it is concluded that service quality delivered to customers in Nigeria’s insurance industry is highly affected by non-compliance with the policy framework.
Recommendations
In light of the above conclusions, below are the suggested recommendations as per each study objective;
Monitoring and Supervision of insurance industry players and the insurance service quality delivered to customers
Basing on study findings, there is a need for IRA staff to visit each and every insurance company in Nigeria and continually give them some technical advice on how to improve their products. This can be done by ensuring that all the listed 88 insurance companies are well located and continually supervised on how they offer insurance claims. There is a need for all insurance products to be designed by experienced persons in the insurance industry so that customers are protected from payment for services that are not of quality.
Mediation role played by insurance regulatory bodies and the quality of the service that insurance companies deliver
Basing on study findings, it is highly important that IRA endeavors to always be objective when it comes to dealing with conflicts between insurance companies and the firms. This can be done by ensuring that all customers of all categories are protected by IRA regardless of their social economic status. Further, this can be done by ensuring IRA officials solve issues involving our customers with fairness and professionalism. It is important that IRA officials concerned with the mediation work are sensitized and well screened to reduce on corruption that affects insurance service quality.
Policy Compliance and the insurance service quality in Nigeria’s insurance Industry Basing on the study findings, it is further recommended that the benefits that IRA gives for those players who comply with guidelines should be motivating so that IRA guidelines are complied with. This can be done by ensuring that all compliant customers are given discounts and incentives periodically. Further, there is a need to adhere to disciplinary actions for all the insurance industry players to deter negative conduct among the insurance firms. This can be done by ensuring that there are tough disciplinary actions for all the insurance industry firms which disregard its policies.
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