The Performance of Marine Insurance Firms in Nigeria: An Augmented SWOT Analysis

Abstract

Abstract:The performance of Nigeria insurance industry has been ranked below global standards and which ranking has implications on risk management in the maritime shipping sector. In this paper, the performance and operating environment of a sample of insurance firms (with marine risk portfolios) were empirically examined. Secondary data on earned premium income, indemnity paid, management expenses and total expenses representing performance indices of these firms over a period from 1974-2013 were collected for analysis of their operational performance. Qualitative data were also extracted from existing literature for Strengths, Weakness, Opportunities and Threats (SWOT) analysis to determine the attributes of operating environment of the insurance firms. An Analysis of Variance (ANOVA) model tests on the performance indices showed that the insurance firms earned more premium than indemnity paid out during the study period. Their management expenses however, exceeded amount of indemnity paid. In terms of challenges facing the firms, the SWOT analysis revealed prevalence of poor quality service delivery to insurance customers, customer distrust, inadequate technical manpower and unfavourable macro-economic environment. Prospects for growth of the industry were found favourable due to introduction of local content policy/cabotage shipping Acts and upgraded risk management framework. The paper recommends that more specific policy interventions be directed at complete removal of impediments in the operating environment of marine insurance firms since their performance outcome has implications on viability of shipping and related maritime businesses.

Role of Marine Insurance on Marine Trade Growth: A Critique of Literature

“…Studies by La, Gong-woo (2005), Nwokoro (2013), Din, Mughal and Farooq (2013), Jung and Lim (2021), Su et al (2021), Gekas (2008, Onwuegbuchunam et al (2017) and Li, (2017) had methodological gap. In addition, all the mentioned studies did not employ desktop review methodology.…”

“…In addition to demonstrating the process of the transmission of knowledge of business organization and the performance of an organic sector for capital accumulation, the case of the marine insurance industry can also demonstrate the process of instilling the 'capitalist spirit' -however 'micro' -in Greek urban societies that were in the process of forming during the nineteenth century. Onwuegbuchunam et al (2017) conducted research on the efficiency of marine insurance companies in Nigeria and published their findings. The purpose of this study was to conduct an empirical investigation on the performance and operating environment of a selection of insurance companies that had marine risk portfolios.…”

Performance Evaluation of Motor Insurance Companies: Panel Data Evidence from Nigeria

“…However, Wairimu [23] finds weak underwriting standards as the highest challenge in the management of general insurance claims and hence should be eliminated through robust polices. Onwuegbuchunam, Ogwude & Igboanusi [24] add that operating environment apart from efficient management of claims settlement and earned premium, impact on performance of marine insurance companies. These papers examined performance determining factors but did not account for differences in performance across firms and time impact of regulatory policy.…”

“…The present paper extends existing literature by determining differences in managerial and technological capabilities among the studied companies and also seeks to establish whether reform policies have had an impact on their output over time. It is specifically an extension of the work of Onwuegbuchunam [24], but in this case, concentrates on motor insurance companies as unit of analysis.…”